Image From ..eere.energy.gov
This week marks the first in which we see the Iran oil embargo in full effect. The U.S. and European Union countries have banned the purchase, transportation, financing and insurance of Iranian oil because of that country's stubborn pursuit of a nuclear program that threatens Israel and the entire Middle East.
Bloomberg reports that Iran was producing about 3.2 million barrels a day in May. Full implementation of sanctions will remove about 1 million barrels a day during the second half of 2012 as buyers disappear and Iranian storage tanks along with super tankers purchased from China become full.
Although Iran is not a significant supplier of oil to the U.S. at the same time Iran's embargo goes into effect, the U.S. Dept. of Energy reports that OPEC countries are losing market share to non-OPEC suppliers and as a result, OPEC countries now represent less than half of U.S. oil imports.
Crude oil imports to the U.S. (1973-2011)
Even though Saudi Arabia is the world's largest producer of petroleum and OPEC countries produce much of the oil in the global market, the U.S. imports most of its oil today from Canada, Mexico, and other non-OPEC countries.
Petroleum imports from Canada have been increasing since the early 80s and in the last decade the U.S. has begun to import more from Russia as well.
Let's take a look at how things have changed. In the early 1970s the U.S. was importing slightly more than 6 million barrels per day. Total imports peaked in 2005 and 2006 at 13.71 million barrels per day before declining with the global recession that followed.
Imports from Saudi Arabia that had peaked at 1.8 million barrels per day in 1991 had slipped to 1.54 million bpd in 2005 and 1.46 million bpd in 2006.
Total imports (OPEC and non-OPEC alike) have declined by 2.35 million bpd since the peak in 2005-2006 and in 2011 were at 11.36 million bpd.
Imports from Saudi Arabia in 2011 were 1.19 million bpd. The last time imports from Saudi Arabia were that low was 1988-89 when they ranged between 1.07 million bpd and 1.22 million bpd. Imports from Canada in 2011 have climbed steadily from 1 million bpd in the late '80s to 2.71 million bpd in 2011. Even Mexico's imports last year (1.20 million bpd) exceeded Saudi Arabia's 1.19 million bpd. In addition to Canada, Mexico, and Russia, the U.S. imported 2.29 million bpd from other non-OPEC countries.
In other words, of the 11.36 million barrels per day imported in 2011, we imported 6.82 million bpd (60 percent) from non-OPEC countries, and 4.53 million bpd (40 pecent) from OPEC in 2011.
While the U.S. can take some satisfaction in seeing OPEC loosen its grip on the U.S. economy, we should pay close attention to the relationships OPEC countries are cultivating with China, currently the world second largest oil consumer. In Saudi Arabia, Iran, Nigeria, Egypt... China has made massive investments in OPEC's infrastructure, specifically for oil discovery, recovery and refining.