US Oil Exports Keep Rising to New Heights

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US crude exports continue to rise, and the growth rate shows no sign of flagging in the near term. The US now ships over 4 million barrels per day of crude abroad, up from virtually nothing just seven years ago. To be sure, the Ukraine war and resulting embargoes on Russian oil have amplified reliance on US crude in global markets. But more structural elements are at play also. Ultimately, the US is quickly establishing itself among the largest global suppliers of crude along with Saudi Arabia and Russia, with major markets in both the Atlantic and Pacific Basin. The main driver for exports is domestic supply growth and a qualitative mismatch with domestic refinery configuration. The US downstream is largely geared towards processing heavier crude grades than those that proliferate in shale plays, a reflection of the US’ long status as a crude importer. As more shale oil came to market, US refiners first backed out lookalike grades from West Africa and Europe — and did so quickly. Crude imports overall fell from 9.2 million b/d to 5.9 million b/d between 2010 and 2020, and currently stand at 6.3 million b/d, government data show. Once displacement was achieved, oil locked in the domestic market priced lower and lower until the Obama administration lifted export restrictions at the end of 2015. This trend has continued, especially with the US downstream rationalizing capacity. US benchmark West Texas Intermediate (WTI) trades over $4 per barrel below global marker Brent, more than justifying the logistics cost associated with export. Now, virtually every incremental barrel of US crude is destined for overseas markets, and the entire logistics system has been upended to bring crude to ports — the reversal of the Seaway pipeline and more recently the Capline illustrate how US supply growth and exports literally turned the domestic midstream 180 degrees.

Oil Trade, Crude Oil
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