As if pipeline bottlenecks, mandatory output curbs and growing hostility to the oil sands weren’t enough, Canada’s energy industry now faces new competition from cheap Saudi crude headed to the U.S. Gulf Coast.
According to Bloomberg News, Saudi Arabia has booked at least eight supertankers to load this month and next from the kingdom’s main oil ports, with most of the bookings destined for the Texas and Louisiana coast. The tankers were contracted as the Saudis slashed their official selling price to the U.S. by $7 a barrel, the biggest drop in data going back 20 years.
Canadian oil exports to the Gulf Coast, the world’s biggest refining market, have more than tripled since 2014, when new pipeline capacity was added. Heavy crude from the oil sands has steadily displaced declining imports from other countries, including Mexico and Venezuela. Now, the Saudis are muscling up.
“If other suppliers are willing to give up the kitchen sink, Canadian crude will suffer,” Sandy Fielden, director of research for Morningstar Inc., told Bloomberg News by phone.
The surge in tanker bookings comes as Saudi Arabia threatened to dramatically boost oil supply after talks with Russia over a curbing supply collapsed at a recent meeting of the Organization of the Petroleum Exporting Countries, sending oil futures to their biggest crash since 1991.
(Bloomberg News)
