US Crude Oil Exports Reach Unprecedented Levels
- 09-Nov-2023 6:30 PM
- Journalist: S. Jayavikraman
The United States continues to dramatically impact the global oil market as it pumps and ships record volumes of crude oil abroad. This development comes as the OPEC+ group maintains its supply restrictions to stabilize the market.
Currently, around 48 tankers are en route to the U.S., with plans to load crude in the coming three months. This is the highest number of vessels destined for America in at least six years, signifying the crucial role US crude now plays in the global oil market.
Since the export ban was lifted in late 2015, US oil has become increasingly influential on the world stage. WTI Midland, a grade of US oil, was added to the Brent basket (a global oil pricing benchmark) in June this year, reflecting its growing importance.
The surge in US crude exports is primarily due to the significant volume being shipped overseas, averaging around 4 million barrels per day (bpd) since the start of the year. In the first half of 2023 alone, exports soared to record highs, averaging 3.99 million bpd, a nearly 20% increase compared to the same period in 2022.
Most of these exports found their way to Europe, specifically the Netherlands and the United Kingdom, with Asia following as the second-largest destination. Despite these record exports, the US still remained a net crude oil importer in the first half of the year.
The United States' domestic production comprises mostly light, sweet crude, while its refineries are designed to process heavy, sour crude oil. This discrepancy results in the country having to export its surplus light sweet crude.
US Gulf Coast exports are projected to rise to 4.1 million bpd in December, an increase of 100,000 bpd compared to the same month last year. This increase in US production and exports comes at a time when OPEC+ pact members, such as Saudi Arabia and Russia, are withholding oil supply to balance the market and bolster prices.
Despite a decrease in active drilling rigs, US shale firms are producing more oil than expected. They are drilling longer laterals and strategically deploying rigs to maximize output. This increase in production has led to a significant growth in exports, positioning oil to potentially become the United States' largest export item this year.
US oil exports have been the largest export category in America's trade with the world through August this year. If this trend continues, 2023 may mark the first time in history that oil becomes the US's largest export for the full year.