In the LOOP: Arab Light imports rebound slightly as Saudi Arabia reports cuts

Imports of Arab Light from Saudi Arabia into the Louisiana Offshore Oil Port are rebounding slowly, even as Saudi Arabia continues to report oil production cuts.

So far in August, Morgan City, Louisiana, the delivery point for LOOP, has taken three cargoes, totaling 1.95 million barrels, of Arab Light, according to the latest S&P Global Platts Analytics and US Customs data. That is compared with no cargoes of Arab Light received at LOOP in July and 1.4 million barrels in June.

June 6 marked the first LOOP import of Saudi crude of the year -- ending a six-month dry spell. Even as LOOP imports of Saudi crude have seen a slight uptick, bringing the total so far this year to more than 3 million barrels, it is a stark contrast to previous years.

By comparison, during the same time frame in 2017, more than 39 million barrels of Saudi Arabian crude, including Arab Extra Light, Arab Light, Arab Medium and Arab Heavy, was brought into LOOP.

The US Gulf Coast has experienced a similar pattern -- with 14.8 million barrels in Saudi crude imports in June, 12.8 million barrels in July and about 5 million barrels so far in August.

The lack of Saudi crude coming into LOOP -- and the US Gulf Coast more broadly -- is a stark contrast to previous years, when Saudi Arabia was a major supplier of crude.

However, Saudi Arabia has curtailed production as part of OPEC and non-OPEC cuts.

OPEC and 10 non-OPEC partners agreed on June 23 to boost output by 1 million b/d by reducing overcompliance with cuts that had been in place since January 2017. The move was intended to alleviate any shortages caused by US sanctions on Iran and continued production problems in Venezuela. OPEC produced 32.32 million b/d in July, up 40,000 b/d from June.

Saudi Arabia, OPEC's largest producer, has declared it would take on the bulk of the increase, but instead cut production by 50,000 b/d from June to 10.39 million b/d. The country self-reported Monday an even larger drop of 200,000 b/d to 10.29 million b/d.

Growing US demand for crude this summer may be driving the increase. Since the start of March, refinery run rates in the US Gulf Coast have increased 666,000 b/d to 9.053 million b/d, according to data from the US Energy Information Administration. However, refinery runs may slow slightly as summer driving season draws to an end and US refinery maintenance season begins.