China & Saudi Arabia Oil Dynamics

From NY Times' article: "China's Growth Shifts the Geopolitics of Oil." Accessed 5 April, 2011 http://www.nytimes.com/2010/03/20/business/energy-environment/20saudi.html?_r=1&pagewanted=2 Few Highlights pointed out in this article: (1) The 2009 global economic recession, which resulted in a notable decrease of the U.S. consumption of Saudi oil (10% less than the 2005-7 peak), simultaneously brought about a change in the Saudis' global oil market policies. The kingdom's exports now tend to go more to China and India. A chief CEO of Saudi Aramco said he believes "this is a long-term transition" - among other things, this might represent a blow to the U.S. oil imports as the ever-growing market in China already made the Saudis scrap its hitherto applied discount for exports to the U.S. The Saudis now have a choice whom to export their oil to, and hence do not need to maintain certain special privileges vis-a-vis the U.S. - on the other hand, as the article also mentions, the diminishing share of Saudi Arabia's U.S. exports might tap into the country's regional security, historically guaranteed by the U.S. However, I do not think this should bother the Saudis too much as the exports to the U.S. are still relatively substantial and very core for the U.S. from long-term perspective. (2) The Saudi-China cooperation at the oil-and-gas market has several dimensions and is by no means short-term. - The Saudis now sell over a million barels a day to China. This represents about a quarter of China's total imports - Several projects run by Saudi Aramco and other companies are already underway in China. They concern primarily a construction of new refineries and other oil-related facilities. (3) The enormous potential of China's future oil demand. - Today, the U.S. is still the top consumer with 18.5 million barrels a day in 2009 - In per-capita terms, this amounts to 22 barels a day per one American. - In comparison, the current per-capita oil consumption in China is only 2.4 barrels a head. - This points to the formidable heights the Chinese demand for oil might turn to in the future years.