Saudi attacks threaten U.S. gasoline price hikes, particularly in California




Saudi attacks threaten U.S. gasoline price hikes, particularly in California
Saudi attacks threaten U.S. gasoline price hikes, particularly in California  

By Devika Krishna Kumar

NEW YORK (Reuters) - U.S. motorists most likely to feel the hit from rising gas prices following the attacks on Saudi Arabia's oil facilities are on the West Coast, which accounts for nearly half of all of U.S. crude imports from the kingdom.

The attacks on Saudi Arabia's oil facilities on Saturday knocked out more than 5% of global oil supply and sent oil prices surging as much as 20%.

U.S. pump prices are likely to rise in coming days as gasoline futures spiked by more than 10% on Sunday trading, analysts said. The national average price of regular gasoline was currently $2.57 per gallon, according to AAA.

However, California motorists, some 8,000 miles (13,000 km) away from Saudi Arabia, could be hit the hardest. Refineries in that state rely heavily on imports for supplies due to its isolated location and lack of pipelines to connect it with oil-rich states such as Texas.

Saudi Arabia exports more than 7 million barrels of crude oil every day, much of that to Asia, but about 47% of what it sends to the United States goes to the West Coast.

For the 12 months ended in June, the U.S. West Coast imported an average of 11.40 million barrels every month of Saudi crude, much of it going to a number of refineries based in California, according to the U.S. Energy Information Administration.

"I absolutely think it's likely that the West Coast will see more of a pricing impact than other regions since they're more tied to Saudi imports," said Patrick DeHaan, head of petroleum analysis at tracking firm GasBuddy.

Saudi Arabia accounted for about 37 percent of California's total foreign oil imports in 2018, according to the California Energy Commission.

"Saudi Arabia has always sought to portray itself as a reliable supplier of crude to the market and for this reason we think they will opt to supply the export market for crude first then products," said Robert Campbell, head of oil products research at Energy Aspects.

The state currently has the second-highest average gasoline prices in the United States at $3.63 per regular gallon of gas, trailing only Hawaii. Fuel prices in California are typically higher due to tight regulations and differing gasoline specifications.

Among the biggest buyers of Saudi Arabian crude are Chevron Corp's 245,000-barrel-per-day (bpd) refinery in Richmond, California, and the 269,000-bpd El Segundo refinery in California. The West Coast, known as oil region PADD 5, includes Washington State, which has also taken in barrels from Saudi Arabia in the last year.

A Chevron spokesman told Reuters the company sources crude from "multiple global suppliers," and it will "take the necessary actions to continue to meet the needs of the marketplace."

The United States has more than 640 million barrels of oil in reserve that could offset tighter supply as a result of the Saudi attacks. U.S. President Donald Trump said on Sunday he authorized the release of oil from the U.S. Strategic Petroleum Reserve (SPR) if needed in a quantity to be determined.

"I don't yet think any area will see 'spikes' because of the attacks, but it certainly could become that if Saudi Arabia production doesn't return to 90% of normal very quickly," DeHaan said.


(Reporting by Devika Krishna Kumar in New York; additional reporting by Stephanie Kelly; Editing by Sandra Maler)

COMMENTS

More Related News

Arrogate, North America
Arrogate, North America's richest racehorse, dies at 7

Arrogate, winner of the 2016 Breeders' Cup Classic and the champion 3-year-old male that year on his way to becoming North America's all-time leading money earner, has died. Juddmonte Farms said Arrogate was euthanized Tuesday after becoming ill. Juddmonte said Arrogate had been having a successful breeding season until last week when it was suspended because of what was initially suspected to be a sore neck.

Deadlock as Qatar embargo marks three-year anniversary
Deadlock as Qatar embargo marks three-year anniversary

In June 2017, Saudi Arabia led its Gulf allies the United Arab Emirates and Bahrain, along with Egypt, to cut all ties with Qatar, accusing it of backing radical Islamist movements and Iran -- a charge denied by Doha. On May 24, 2017, a statement attributed to Qatar's ruler appears on the state news agency's website, apparently endorsing Islamist movements and criticising US President Donald Trump. Qatar says the site has been hacked and that the statement is fake, but it is picked up and published in regional media.

Cities push back as airlines seek dozens of new service cuts. Is your airport on the list?
Cities push back as airlines seek dozens of new service cuts. Is your airport on the list?

The proposed flight cuts come as there are signs that airline demand may finally pick up after the coronavirus sent the travel industry into a spiral.

Family of Grand Princess passenger who died of coronavirus files suit against Carnival
Family of Grand Princess passenger who died of coronavirus files suit against Carnival

The family of a California cruise ship passenger who died of coronavirus has sued Princess Cruises and its parent company Carnival in federal court.

Coronavirus updates: George Floyd protests could fuel COVID cases, Trump postpones G7 summit
Coronavirus updates: George Floyd protests could fuel COVID cases, Trump postpones G7 summit

Also, New York Gov. Cuomo will give families of frontline workers death benefits and United Airlines announces executive cuts as coronavirus rages on.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy