Main Origin of Crude Oil Imports, United States, 1973-2016

Main Origin of Crude Oil Imports, United States, 1973-2016

Source: US Energy Information Agency, International Energy Annual Report. In thousands of barrels per day.

Since the 1970s, both the level and the composition of American crude oil imports have changed. The volume of crude imports is a balancing act between the level of domestic economic activity where phases of growth and recession shift growth prospects, international oil prices (comparative benefit of purchasing oil on foreign markets), and domestic oil supply. While domestic supply shows limited volatility, imports are mainly accommodating the fluctuations of the American demand through economic cycles. The deep recession in the early 1980s was associated with a sharp drop in imports while domestic production remained close to unchanged. From the mid-1980s to the mid-2000s, imports increased steadily, a process interrupted by recessions (e.g. 1991, 2001). However, since the mid-2000s, the trend shifted in part because of the financial crisis of 2009, but more importantly, because of the rise in domestic oil production through the exploitation of shale oil.

The composition of crude oil imports has also substantially changed. Between the first and second oil shocks (1973 and 1980), Nigeria and Saudi Arabia were the main sources of imports (as well as Iran, Algeria, and Libya). Then, the strategy shifted with a diversification towards Latin America, particularly Mexico and Venezuela. By the late 1990s and early 2000s, Saudi Arabia, Canada, Mexico, and Venezuela assumed a roughly similar share of crude oil imports (around 15%), underlining the diversification strategy. Geopolitical instability in Nigeria, the depletion of Mexican oil reserves, instability in the Middle East, and Venezuela all contributed to a paradigm shift from 2005. The substantial rise of Canadian oil imports is associated with its adjacency, the development of additional shale oil reserves, and its enduring political stability. Canada has become America’s dominant supplier of crude oil, accounting for 41% of American imports in 2016. This is a radical shift in the oil sourcing and diversification strategy of the United States since Canada accounts for the highest share ever recorded.