Middle East crisis lifts demand for U.S. oil exports
Trump continues to highlight the rise in U.S. oil exports while the Strait of Hormuz remains blocked. Oil and gas exports give the United States greater political and diplomatic weight, but only up to a point.
Infrastructure constraints will eventually impose a ceiling on export capacity, as Axios reports. At the same time, higher international shipments can offset only a small part of the sharp decline in flows from the Middle East, a disruption also closely watched by energy-importing economies across Africa.
Federal data show that combined exports of crude oil and petroleum products, including gasoline and jet fuel, reached a record 12.9 million barrels per day last week. Weekly figures can be volatile, but analysts agree the trend is upward, partly because energy-hungry countries are moving quickly to secure supplies.
U.S. crude exports could reach a monthly peak
In recent years, U.S. crude oil exports have ranged between 3.5 million and 4.5 million barrels per day. They could now reach a new peak.
Market intelligence firm Kpler expects exports to average 5 million barrels per day in April for the first time on a monthly basis.
Several factors are supporting the trend. More very large crude carriers, known as VLCCs and able to carry nearly 2 million barrels, are available because of the closure of the strait. U.S. oil prices are also relatively more competitive.
Logistical barriers to U.S. oil exports
Kpler analyst Matt Smith believes crude exports could reach 6.5 million barrels per day in a single week, but sees a monthly ceiling of about 5.5 million barrels per day because of logistical constraints.
With petroleum product exports already at record levels, S&P Global Energy analyst William O’Neil sees port constraints, as well as another obstacle: diesel and other product stocks are falling quickly.
This, combined with refineries operating at full capacity, suggests that today’s levels “cannot be sustained indefinitely before domestic stocks become so tight that refiners are forced to reduce exports,” the analyst told Axios.
Gulf Coast terminal capacity is the key question
The major question is whether the current situation will attract new private investment to expand terminal capacity on the U.S. Gulf Coast.
Several offshore port projects have been in the planning phase for years. Of these, however, only Sentinel Midstream’s Texas GulfLink project appears to be moving forward in concrete terms.