Kuwait stops oil shipments to US for first time since first Gulf War

Halt is latest sign that booming demand for oil in Asia is re-drawing petroleum trade routes

Kuwait has all but stopped shipping crude to the US for the first time since the aftermath of Saddam Hussain’s invasion in 1990, eroding an economic link between Washington and the Arab state.

The halt is the latest sign that booming demand for oil in Asia, particularly as the US reimposes sanctions on Iran, and rising supplies from America on the back of the shale revolution are re-drawing petroleum trade routes.

US imports of Kuwaiti crude fell to zero over four weeks through late September, the first time that shipments have completely stopped since weekly data became available in June 2010, according to the US Energy Information Administration. Based on monthly data, Kuwaiti shipments to the US haven’t stopped since May 1992, when the Opec producer was still recovering from oilfield fires ignited by retreating Iraqi troops in the first Gulf War.

Kuwait is diverting its barrels instead into the more lucrative Asian market, where prices are higher for the type of highsulphur crude the small Middle Eastern nation pumps, according to a person familiar with the matter, who asked not to be identified because the matter isn’t public.

Kuwaiti oil fetches about $80 a barrel in Asia compared with about $79 in the US, according to Bloomberg calculations based on benchmark prices and the country’s official selling prices. Kuwaiti crude sells at about $76 a barrel in Europe.

“Iranian sanctions are providing a chance for others to sell more into Asia where prices are better than for sales into the US,” Andy Lipow, president of consultant Lipow Oil Associates LLC, said in Houston.

Kuwait Petroleum Corporation’s reduction of crude exports were ‘coordinated with US and European clients,’ the company said in a statement on Kuwait News Agency (KUNA) website. The American market is ‘strategically important’ and its supply contracts are ‘functional’, the state-owned oil producer said.

Kuwait grabbed market share in the US from Saudi Arabia and Iraq between 2012 and 2014, shipping more than 400,000 barrels a day in some months. After that, however, Kuwaiti exports to the US declined sharply, and Riyadh and Baghdad boosted their sales. On a four-week average basis, Saudi Arabia shipped 1.01 million barrels a day, while Iraq exported 408,000 barrels a day.