Oil consumption
The global need for oil is huge, and countries all around the world are continuously looking to purchase oil. Saudi Arabia, as one of the world’s largest oil-producing countries, is a major exporter of crude oil, providing nearly one-fifth of the world’s oil. But who takes the most oil from the Kingdom of Saudi Arabia?
According to Saudi Aramco’s official figures, the United States is the country who imports the most oil from Saudi Arabia. In 2019 alone, the United States bought 868 million barrels of Saudi crude, making up 40 percent of the kingdom’s total exports.
The United States’ close relationship with Saudi Arabia dates back to 1945, when the US and the Kingdom signed a Trade and Investment treaty. Over the past 75 years, this relationship has deepened, mainly due to the large amount of oil imported from Saudi Arabia. In recent years, the US has aimed to reduce its dependence on OPEC oil—including Saudi crude—but until domestic production can make up the difference, US will continue to rely heavily on Saudi exports.
China is the second-largest importer of Saudi crude, with 735 million barrels imported in 2019, accounting for 34% of Saudi’s oil exports. While China’s relationship with the kingdom has been tumultuous in the past, it has become more cooperative over the years, leading to the import of increasing amounts of Saudi crude. During the COVID-19 pandemic, Saudi Arabia helped China with its crude oil supply, in an attempt to reduce the economic effects of the pandemic.
Japan follows third place on the list, importing 154 million barrels in 2019, or 7% of total Saudi exports. Japan has been purchasing Saudi crude consistently since the 1980s, when Saudi Arabia began to diversify its economy from oil production. This steady flow of oil has been key to Japan’s economic growth, and the country continues to be a major oil importer from the kingdom.
Other countries who purchase Saudi crude are India (7%), South Korea (3%), Netherlands (2%), and Singapore (2%). Although the amount each imports is small in comparison with the US and China, they still make up a significant portion of Saudi’s oil exports.
Economic impact
The purchase of large quantities of Saudi crude by several countries has had a significant economic impact on both Saudi Arabia and the countries that import the oil. On Saudi Arabia’s part, exporting its oil has resulted in the country becoming one of the world’s richest nations, with a GDP of almost $700 billion in 2019.
For the countries importing crude from Saudi Arabia, oil purchases form a big chunk of their GDP. In the United States, for example, imports from Saudi Arabia account for around 5% of US GDP. In 2019, the US spent roughly $62 billion on Saudi oil, making it the largest single source of US imported oil.
The US’s large oil imports from Saudi Arabia have come under scrutiny, with some groups arguing that the US should reduce its dependence on Saudi crude. Environmental activists have long been vocal about cutting down on oil usage and transitioning to renewable energy sources, and reducing oil imports would certainly be one step in making this transition possible.
In 2019, the US implemented the “Saudi Arabia Accountability Act”, which imposed sanctions on the Saudis and restricts oil imports from the country. Despite this legislation, however, the US has continued to buy large amounts of Saudi crude, indicating that it has no plans to reduce its purchases anytime soon.
Oil production
Saudi Arabia is the world’s top oil producer, with an estimated 12.6 million barrels produced every day, accounting for about 13 percent of the world’s total oil production. The majority of the oil produced in Saudi Arabia is exported, with much of it going to the US, China, and Japan. Saudi Arabia’s strong presence in the global oil market makes it the world’s most influential oil exporter.
At the heart of Saudi Arabia’s strong presence in the global oil market is the state-owned company Saudi Aramco, which was created in 1933 to explore for and produce oil on behalf of the Saudi government. Since then, Aramco has become the leading oil producer and exporter in the world, and is now worth an estimated $1.5 trillion, making it the most valuable company in the world.
With its impressive oil production capabilities and its global presence, Saudi Arabia is one of the world’s most influential oil exporters, and its oil exports shape the global oil market. Saudi oil is in high demand, and with the US, China, and Japan being the biggest importers of its crude, it stands to reason that Saudi Arabia’s oil production and exports will continue to be a major force in the coming years.
Political implications
The relationship between Saudi Arabia and importers of its crude, the US, China, and Japan, is based on economic and political ties. The US has a long-standing, strategic alliance with the kingdom, which stretches back to 1945 when the US and Saudi Arabia signed their first agreement. Since then, the countries’ relations have been mainly influenced by oil imports and the stability of global oil markets.
China and Saudi Arabia also have a long history of cooperation, especially with regards to oil. The two countries signed a number of deals in recent years, and relations between the two seem to have stabilized. China has become an important strategic partner for Saudi Arabia, with the two countries working together on a number of economic and political projects.
Finally, Japan and Saudi Arabia also have strong economic ties, owing to the fact that Japan is Saudi’s third largest importer of crude oil. Japan is one of the Saudi’s top foreign investors, and the two countries cooperate on various trade and investment projects. The Japan-Saudi alliance continues to be an important part of both countries’ foreign policy.
Environmental implications
The purchase and use of Saudi crude by the countries importing it has a significant environmental impact. Oil production and consumption creates harmful pollutants and greenhouse gases, which contribute to climate change. Burning oil also releases particulate matter and nitrogen dioxide, which can have a negative impact on human health.
In addition to the environmental damage caused by burning oil, the production of crude also affects the environment. Oil extraction is often done by fracking, a process that is often cited as being harmful to the environment. Studies have shown that fracking can lead to water contamination and air pollution, and can also harm biodiversity.
Oil exports from Saudi Arabia also contributes to environmental destruction. The oil-exporting process itself can lead to air and water pollution, and the transportation of oil via pipelines or ships can also cause damage to the environment.
The good news is that some steps have been taken to reduce the environmental damage caused by oil production. In certain countries, taxes have been imposed on oil production and use, in an effort to reduce their emissions and switch to renewable energy sources. Renewable energy sources such as solar, wind, and geothermal have become increasingly popular, and progress has been made towards transitioning away from oil.
Economic consequences
As well as posing environmental risks, Saudi crude imports also have economic consequences. The production and purchase of oil are expensive, with US oil imports from Saudi Arabia alone costing nearly $62 billion in 2019. This is money that could be used to invest in other activities, such as renewable energy or domestic production capabilities.
The production of renewable energy has become increasingly cost-effective in recent years, and many countries have invested in renewable energy production instead of relying solely on oil. This can reduce economic dependence on oil, as well as help mitigate environmental damage.
Despite the high costs associated with importing Saudi crude, the country’s importance in the global oil market means it is not likely to disappear from the scene anytime soon. Thanks to Saudi Arabia’s large production capabilities, it is certain to remain a major player in the oil market for the foreseeable future.
Conclusion
Saudi Arabia is one of the world’s most influential oil exporters, and its oil exports shape the global oil market. The US takes the largest portion of Saudi crude, followed by China and Japan. While oil production and consumption have an environmental and economic cost, Saudi Arabia’s importance in the global oil market means it is sure to remain a major player in the coming years.
