US oil imports from OPEC plunge to 30-year lows. China's are surging

New York(CNN Business) America's long-addiction to oil from OPEC is fading -- even as China's own reliance on the cartel's crude has soared.

US oil imports from OPEC plunged to a 30-year low in March, according to a report published on Thursday by the US Energy Information Administration. The imports, totaling 1.5 million barrels per day, have tumbled by about 75% over the past decade.

The declines have been driven by three major factors: blockbuster American oil production, tough US sanctions on Venezuela and Saudi Arabia's sharp supply cuts.

"The broader trend reflects the US shale revolution and Arabian Gulf producers' desire to shift sales to fast-growing Asian markets," Bob McNally, president of consulting firm Rapidan Energy Group, said in an email.

The United States has long sought to reduce its dependency on foreign oil. Many Americans still recall the long lines at gas stations and skyrocketing prices caused by the OPEC oil embargo in the early 1970s.

The news comes as the world's attention has refocused on the Strait of Hormuz, the critical chokepoint carrying oil produced by Gulf nations to the rest of the world. A pair of tankers were attacked on Thursday near the Strait of Hormuz, briefly sending oil prices rallying.

"We've reduced our dependency, but we haven't completely eliminated it," said Ryan Fitzmaurice, energy strategist at Rabobank.

On the other hand, China's exposure to OPEC has never been higher. The world's No. 2 economy has imported a record amount of oil from OPEC, according to S&P Global Platts. The cartel has been happy to shift sales to China and other fast-growing Asian economies.

China's oil demand jumped by 3% in 2018, doubling the world's increase, according to an OPEC report released on Thursday. And it's expected to rise nearly as much this year, despite the trade tensions and increased usage of electric vehicles.

Texas is pumping more than most OPEC members

The United States doesn't need as much OPEC oil as it once did. Over the past decade, not only have total oil imports declined but OPEC's share of imports has also dipped, according to the EIA.

Some of that oil is now being pumped domestically, especially in Texas. US oil output has more than doubled over the past decade. America has surpassed Saudi Arabia and Russia as the world's leading producer. And that record-setting production is expected to continue. Texas alone will soon pump more oil than any OPEC member not named Saudi Arabia.

Daily oil production in the United States surged by 2.2 million barrels per day in 2018 alone, marking the largest ever annual increase by a single country, according to BP's yearly statistical review of world energy that was released on Wednesday.

The United States is pumping so much that it's become a significant exporter of oil ever since Congress lifted the ban in late 2015.

More recently, the Trump administration has imposed tough sanctions on Venezuela, which has long been a source of heavy crude needed to keep US Gulf Coast refiners operating near full capacity.

In 2018, the United States imported 505,000 barrels per day from Venezuela -- or roughly a fifth of the total purchased from OPEC, according to the EIA. However, that figure dropped to just 47,000 barrels per day in March -- and several weeks since then have fallen to zero.

Beyond the sanctions, the EIA said the drop of imports from Venezuela reflects widespread power outages in the nation as well as "long-term mismanagement" of its oil industry.

Saudi Arabia slashes shipments

Meanwhile, OPEC reached an agreement last year to slash production in a bid to put a floor beneath sinking prices. Saudi Arabia, the world's largest oil exporter, has taken the brunt of those cuts.

Saudi Arabia has intentionally lowered shipments to the highly transparent US market in a bid to prevent stockpiles from rising. US oil imports from Saudi Arabia have dropped by about a quarter so far this year, according to the EIA.

That strategy was working earlier this year, though US inventories have since spiked, setting off a bear market in oil prices.

"They are targeting the US by keeping their exports at quite low levels," said Rabobank's Fitzmaurice.

While US purchases from OPEC have declined, other players have stepped up to fill the gap. US imports from non-OPEC countries Canada, Mexico, Brazil and Colombia have increased, according to the EIA. In fact, the EIA said that over the past four years Canada alone has shipped more oil to the United States than all OPEC nations combined.

It's important to note that while the United States has significantly weaned itself off OPEC oil, the cartel still sends a significant amount of oil to America.

And OPEC still has significant influence. Supply cuts or increases by OPEC, and Saudi Arabia specifically, have the ability to impact prices around the world.

And with tensions between the United States and Iran soaring, a major supply disruption in the Middle East would still deal a shock to the oil market.

"If there were supply outages, that would turn momentum back to the upside," said Fitzmaurice. "It would be a whole different ball game."