Despite Tensions From The Khashoggi Affair, Saudi Arabia Is Unlikely To Stop Shipping Oil To the US
“We have seen cases in the last few years, and in recent history, of how you don’t see the energy flows interrupted or disturbed despite animosity between different countries.”
The official story from Saudi Arabia about what happened to Saudi journalist and dissident Jamal Khashoggi at its consulate in Istanbul on Oct. 2 has changed once again. Now, the Saudi government says Khashoggi was killed as part of a “rogue operation” by Saudi agents who are entirely independent of the crown prince. This divergence from previous statements made by the Saudi government also conflicts with allegations from Turkish officials who claim they have video and audio proof that Khashoggi was murdered by a 15-man team that arrived and departed on the same day.
Thousands of miles away, there’s important potential implications for oil in Texas. Saudi Arabia is a major player in the oil industry, particularly in the energy center of Houston. Energy insider Matt Smith, director of commodity research at ClipperData, explains what Khashoggi’s disappearance means for us.
The main concern, Smith says, is that should sanctions come, the Saudi government might decide to weaponize oil. This would mean the Saudis could cut oil flow to the United States. Smith says the size of the U.S. oil market would make it a clear target.
Nevertheless, Smith says Saudi Arabia is the second-largest supplier of crude oil to the U.S. This year alone, it has sent about 860,000 barrels a day – a third of which goes to a Saudi-owned refinery in Port Arthur. So, Smith says despite the push for sanctions, the likelihood that the Saudi government could retaliate by stopping their oil shipments is low.
“We have seen cases in the last few years, and in recent history, of how you don’t see the energy flows interrupted or disturbed despite animosity between different countries,” Smith says.
Smith says a good example of this is Venezuela. Although there have been calls for sanctions against the Latin American country, that hasn’t really affected its oil exports to the U.S.
“We are still seeing half a million barrels a day from Venezuela being sent to the U.S.,” Smith says. “So, despite this animosity, you still continue to see the flows of energy flowing.”
Smith says he believes the situation will continue to make headlines but likely have little impact on oil in the end.
Written by Acacia Coronado.