MASSIVE "TSUNAMI OF SAUDI OIL" COMING TO DESTROY U.S. OIL INDUSTRY

One of things causing the most unease at the moment is the sharp fall in the price of oil. This is usually seen as a signaller of a major economic downturn. But the oil glut -- or more accurately the plummeting demand for the "Black gold" -- is only set to get worse with reports of a fleet of Saudi tankers on their way to the U.S.

As reported by OilPrice.com:

The highest number of Saudi oil shipments in years are making their way to the United States this month, threatening to make an already dire situation in the U.S. oil industry even worse.

With oil demand crashing in the lockdown and storage capacity filling up fast, more Saudi oil imports is the last thing the U.S. oil market needs right now...

In early April, tanker-tracking data compiled by Bloomberg showed that Saudi Arabia – the world’s top oil exporter – was making good on its promise to flood the world with oil even as demand collapses, with a surge in tankers carrying Saudi crude to the United States.

Last week, The Wall Street Journal reported that the volume of Saudi crude en route to the United States is seven times higher than the typical monthly intake of Saudi oil in 2019.

The tankers were loaded before OPEC+ struck a new agreement to take 9.7 million bpd off the market in May and June when Saudi Arabia had embarked on an aggressive price war for market share after the previous OPEC+ deal collapsed in early March.

On April 1, when the previous agreement expired, Saudi Aramco boasted that it was “breaking records to supply 15 tankers with over 18.8 million barrels of oil”...

Saudi Arabia more than doubled its shipments to the U.S. in March—to 829,540 bpd from 366,000 in February, according to TankerTrackers, which tracks oil flows via satellite images. In the first two weeks of April, Saudi Arabia sent 1.46 million bpd to the U.S., TankerTrackers data showed, as cited by CNBC.

This massive surge of oil on the U.S. markets is definitely bad news for the U.S. domestic oil industry, which can only make a profit if the price of a barrel of oil is over $40. Right now a barrel of Brent Crude is around half that price and set to fall to $10. 

Really, with storage capacity running out, demand at 1968 levels due to the coronavirus shut down, and a massive flood of cheap oil from abroad forcing down prices even more, this is starting to look like a perfect storm for the US oil industry. Will much of it survive into 2021?

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