Tag: U.S. Oil Inventory

Saudi Arabia's "Mini Oil Embargo" May Backfire

Posted on by Robert Boslego

On October 20, 1973, Saudi King Faisal announced KSA was joining in an oil embargo against the United States and Europe in favor of the Arab position in the Yom Kippur War. In an interview with international media, King Faisal said:

“America's complete Israeli support against the Arabs makes it extremely difficult for us to continue to supply the United States with oil, or even remain friends with the United States."

The price of oil quadrupled in short order, a few months. The oil shortage in America was managed by gasoline rationing by President Nixon. Drivers could buy gasoline on “odd” or “even” days, depending on the last digit of their license plate. There was also a maximum dollar amount set on purchases of $10. Motorists often had to wait in line for an hour to buy gas.

The economic impact on the U.S. and the world economy was devasting. It caused a massive recession in 1974-75, even though the embargo was lifted in March 1974. The Saudis and other OPEC producers learned how “inelastic” (i.e., non-responsive to price) gasoline demand was and their ability to stuff their coffers even with small cuts to production. Continue reading "Saudi Arabia's "Mini Oil Embargo" May Backfire" →

Oil Prices Break-Out of Trading Range

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Oil futures prices have broken above the trading range where they have been since February when the market was expecting supply and demand would balance quickly as a result of the OPEC/non-OPEC deals. But those hopes were dashed because the global demand was in a seasonal decline, and inventories remained stubbornly high.

Prices managed to break higher due to a combination of circumstances:

U.S. and Global Inventories

Hurricane Harvey in the U.S. Gulf of Mexico (GOM) disrupted refinery operations, causing product stocks to draw rapidly. It was followed by Hurricane Nate, which disrupted crude oil production in the GOM.

In addition, U.S. crude exports reached record levels recently, averaging 1.744 million barrels per day (mmbd) over the past four weeks, a gain of 293 % from the same weeks a year ago. Petroleum product exports have also been strong, averaging 5.125 mmbd in the same period, up 23% v. a year ago.

Together, these trends have reduced U.S. inventories by 40 million barrels since the week ending September 8th. Global OECD stocks have dropped about 51 million barrels from May through September, though this is largely due to normal seasonal trends. Continue reading "Oil Prices Break-Out of Trading Range" →