US Crude Imports: Growing So Far This Year

Clarksons

Since 2006, US seaborne crude imports have fallen consistently, from 8.5m bpd in 2006 to 4.2m bpd last year. This decline has been driven by a number of factors, such as increased landborne imports from Canada and of course, the rise in US shale oil production. However, as low oil price pressures continue to bite, US seaborne crude imports seem to be making something of a comeback so far in 2016.

The Slide Back

Between 2006 and 2015, US seaborne crude imports fell by a CAGR of 7% p.a. to 4.2m bpd (half the level of 2006), largely due to the surge in US shale oil production. The absolute decline in imports in 2006-15 was equivalent to 11% of global seaborne crude trade last year. During this period imports from West Africa fell by almost 90% to just 0.2m bpd. Meanwhile, imports from the Middle East (MEG) declined by 31% to 1.5m bpd last year. Whilst imports from the Caribbean and Latin America also decreased by around 30% between 2006 and 2015, since 2013 they have remained stable at around 2.3m bpd.

Another Faller

However, following the fall of the oil price in 2H 2014, US shale oil production came under significant pressure, consistently falling m-o-m since mid-2015 due to the high production costs associated with fracking, and in the first five months of 2016, US shale oil output is down by 5% y-o-y. Meanwhile, US refinery throughput has remained steady so far this year whilst crude inventory building has remained robust. These factors, as well as more limited growth of US landborne imports of Canadian crude have supported 11% y-o-y growth in US seaborne crude ,imports in the first four months of 2016 to 4.2m bpd.

Getting Back Up Again

This increase has been largely accounted for by growth in imports from the Middle East and West Africa, with crude imports from Iraq and Saudi Arabia up 71% and 13% y-o-y respectively in January-April. Similarly, US imports of WAF crude have surged by around 160% y-o-y in the same period, although are still limited at 0.4m bpd. Meanwhile, US imports from Latin America and the Caribbean have fallen 5% y-o-y so far this year.

We’ve Come A Long Way

As a result, growth in imports from the MEG (with a journey from Saudi Arabia to the US Gulf up to around 12,000 miles long, depending on route) has supported the estimated average haul of US seaborne crude imports rising by 7% y-o-y to average around 6,400 miles in the first four months of this year. Whilst this is not as long as the average haul in mid-2014, it represents a notable increase from the sub-6,000 mile lows of mid-2015.

So, the fall in US shale oil output has allowed US seaborne crude import growth to start to make a comeback so far this year. Whilst inventory drawdowns are expected to limit total import growth, in full year 2016 US crude imports are projected to rise by 7%. Furthermore, the growth in long-haul imports from the Middle East is helping support VLCC demand this year. Clearly, at least for now, US crude imports seem to be back on the comeback trail.

chrt

Source: Clarksons

LEAVE A COMMENT

×

Comments are closed.