Statistics

Annual Report: No. 17 Saudi Arabia - Quenching the oil thirst

September 15th, 2006

Trade between the United States and Saudi Arabia can be summed up in a single word: oil.

Some 95 percent of U.S. imports from the world’s top oil-producing nation in 2005 were energy-related products, principally crude oil. Those U.S. imports rose 30 percent to $27 billion, to give the United States a $20 billion trade deficit with the Middle Eastern nation.

Crude oil represented $24.8 billion of the total two-way exchange of $34 billion. Non-crude oil came in at a distant $1.3 billion.

According to the Department of Energy’s Information Agency, Saudi Arabia is the United States’ No. 3 provider of crude after Canada and Mexico. Venezuela and Nigeria hold the No. 4 and No. 5 spots, respectively.

Shipments from the five countries combined account for 74 percent of all U.S. crude oil imports.

The United States also imported $372 million-worth of ether alcohol from the Saudis, up 25 percent, while natural gas imports soared 56 percent to $292 million, from $187 million in 2004. Other major U.S. imports included nitrogenous fertilizers, which gained 55 percent to value $126 million.

According to the Saudi Arabian Embassy in Washington, D.C., commerce between the two countries is likely to see continued gains now that the OPEC country has joined the World Trade Organization. After 12 years of negotiations, Saudi Arabia late in 2005 became the 149th nation in the trade organization.

By entering the WTO, the Arab nation is seeking to further liberalize its trade regime and attract more foreign investment. That investment is expected to help Saudi Arabia diversify its economy more, slightly lessening its dependency on oil revenues.

While the United States was buying Saudi oil, the Saudis were purchasing American automobiles. Passenger cars were the single-largest U.S. export to Saudi Arabia, valuing $2.1 billion in 2005 – an increase of more than 107 percent from 2004.

Exports of parts for regional airplanes came in second at $354 million, up just slightly from $350 million in 2004. Machinery parts, the No. 3 U.S. export to Saudi Arabia, saw dramatic gains, rising 58 percent in value to end the year at $321 million. But aircraft sales were the big winner, jumping to $203 million from just $35 million a year earlier.

The United States provides Saudi Arabia with military aircraft. In the past, Saudi Arabian Airlines also had been an importer of U.S. aircraft, using a fleet that combined Boeing, Lockheed, McDonnell Douglas and France’s Airbus jets, but last year it placed a $400 million order for 15 regional jets to become the first Middle Eastern carrier to buy planes from Brazilian aircraft manufacturer Embraer.

The Saudis also buy U.S. aircraft parts, but that trade fell 24 percent to $123 million.

New Orleans closed 2005 as the No. 1 Customs district handling Saudi Arabian trade. The value of the cargo that passed in and out of New Orleans spiked 43 percent to end the year at over $8 billion.

That comes despite damage caused to Gulf Coast cargo facilities during Hurricane Katrina in 2005. Most Saudi imports came through the Port of New Orleans and the Louisiana Offshore Oil Port, a terminal 20 miles south of the coast that handled some 1 million barrels of crude oil a day last year, or 11 percent of U.S. imports.

Houston was the second most important Customs district when it came to Saudi trade, with $5.6 billion in cargo, a 7 percent rise from 2004.

Saudi Arabia’s entry into the World Trade Organization should boost its commerce with the United States.

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