U.S. crude oil exports continue to reshape the global market as America is pumping record volumes of oil and shipping record volumes of it overseas while the OPEC+ group withholds supply to "stabilize the market."
These days, as many as 48 tankers are headed to the U.S. and expected to load crude in the next three months, the highest number of vessels in at least six years, according to tanker-tracking data compiled by Bloomberg.
Some of those tankers are en route to the U.S. Gulf Coast even with no cargo booked yet, London-based shipbroker EA Gibson told Bloomberg.
The large fleet of supertankers bound for the United States highlights the increasingly growing role American crude plays on the global oil market.
In less than a decade since the export ban was lifted in late 2015, U.S. oil has become so significant for the global market that WTI Midland was added in June this year to the Brent basket of crude oil grades that is used as a benchmark for pricing the world's most traded oil contract.
The reason WTI Midland is becoming more and more important in the Dated Brent assessment is, again, the volume of U.S. crude being shipped abroad, which has averaged around 4 million barrels per day (bpd) since the start of the year.
U.S. crude oil exports hit record highs in the first half of 2023, averaging 3.99 million bpd. That's up by nearly 20% compared to the first half of 2022, according to data from the Energy Information Administration.
The largest share of U.S. crude oil that is exported made its way to Europe, at 1.75 million barrels per day-mostly to the Netherlands and the United Kingdom. Asia was the second-largest destination, receiving 1.68 million bpd, with the largest portion heading to China and South Korea. Related: Higher Oil Output Pushes Occidental Petroleum Q3 Profits Up
Despite the record exports, the United States remained a net crude oil importer in the first half of the year, according to EIA data, even with increasing domestic production, importing 8.836 million bpd in June-nearly half of which came from Canada. Refineries in the United States are geared to process heavy, sour crude oil, while most of the oil produced in the United States is light, sweet crude.
With record-high U.S. crude production, more light sweet crude makes its way overseas.
"US slate-optimization is forcing further volumes of US light sweets to the waterborne market," Richard Price, an oil markets analyst at Energy Aspects, told Bloomberg.
U.S. exports from the U.S. Gulf Coast are set to rise to 4.1 million bpd in December, 100,000 bpd higher compared to the same month last year, Price said.
Rising U.S. production is pushing American exports to record highs at a time when Saudi Arabia, Russia, and other members of the OPEC+ pact are withholding some oil supply as they seek to rebalance the market and prop up prices.
Despite the loss of active drilling rigs, U.S. shale firms are producing more oil and have even exceeded some skeptical projections from earlier this year. U.S. exploration and production companies are drilling longer laterals and deploying rigs to the most promising areas to get more bang for their buck.
As a result of rising production and often favorable arbitrage economics, exports have grown so much that oil is on track to be the largest export item for the United States this year for the first time in history.
In terms of both volumes and value, U.S. oil exports were the biggest export of all categories in America's trade with the world through August this year and are likely to be such for the full year 2023-for the first time ever, according to an analysis by Ken Roberts at WorldCity, a company that tracks U.S. exports based on U.S. Census Bureau data.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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Comments
OPEC has become irrelevant. Countries like Guyana and Brazil have no appetite to join them as the OPEC has become nothing more than a political vehicle for Saudi.