Analyst Dennis Gartman illustrates an excellent point in today’s Gartman Letter. He explains how the United States is becoming increasingly reliant not on Saudi Arabia for oil, but rather, Canada.
One thing we wonder about. What does this mean in terms of geopolitics? The US and Saudi Arabia have held a “special relationship” for while, driven in large part by oil co-dependancy. It’s hard to see that holding up once the economic rationale evaporates.
The Gartman Letter: Finally, we’ve taken two graphs that we found inordinately interesting from the IEA website and included them here this morning the page previous of the imports of crude oil from Canada and from Saudi Arabia into the US. They tell a very, very clear story of steadily increased “dependence” by the US upon Canada for its crude oil needs and the very rapid non- dependence on the part of the US upon Saudi Arabian crude oil. Simply put since 1993 when the US was “taking” something close to 25,000,000 barrels of crude a month from Canada the trend has been steadily and almost perfectly upward from the lower left to the upper right on the chart, to the point in recent month where the US has been importing something closer to 60,000,000 barrels of crude each month from Canada.
The story on the part of the Saudis is decidedly different. Back in ’93, the US was taking on the order of 40,000,000 barrels of crude from Saudi Arabia each month. That grew… much more quietly that had the US “dependence” upon Canada for the imports of crude, but nonetheless steadily… to the point in ’08 where we were taking approximately 45,000,000 bpm from the Saudis. Then the chart changed materially, for in the last several months our imports from the Saudis have fallen from the proverbial cliff, to the point where we are now taking an average of “only” 29,600,000 barrels of oil per month from them. Why this sharp and very evident decline in the imports from Saudi Arabia has happened is open to debate, and we are open to possible explanation from our friends in the oil business; however, the trends are clear as the US becomes very steadily more and more “dependent” upon Canada and less and less dependent upon the Saudi Arabians for its lifeline of crude oil.
Tomorrow we’ll look at the imports from Mexico, the chart of which is almost as interesting as is today’s chart of the Saudis.
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