U.S. waterborne imports of crude from OPEC+ members including Saudi Arabia have dropped steadily over the last year, further tightening supplies in the U.S. while supporting other markets including Europe, according to flows data and analysts.
Going forward, the level of U.S. crude imports from OPEC and other exporters and U.S. shipments to Europe will probably have a more direct impact on global oil prices thanks to a change made earlier this year to the Brent crude benchmark.
Lower U.S. imports coincide with supply cuts by the Organization of the Petroleum Exporting Countries, Russia and other allies, and extra voluntary curbs from Saudi Arabia and Russia of a combined 1.3 million bpd until the end of 2023.
The decision by Saudi Arabia and Russia to extend the voluntary cuts drove up oil prices to over $90 a barrel in late September. The cuts also tightened supplies of crude, particularly sour grades, ahead of the winter heating season.
Total U.S. crude waterborne imports are set to average 2.47 million barrels per day in October, down from 2.92 million bpd in September according to figures from data intelligence firm Kpler, with shipments falling from OPEC+ producers including Nigeria, Algeria and Saudi Arabia.
Within that, Saudi crude exports to the U.S. are set to drop to 241,000 bpd in October, Kpler figures showed, down from 286,000 bpd in September and from 410,000 bpd in October 2022.
Some of the decrease is linked to the change of seasons. U.S. peak gasoline demand winds down at the end of summer as refineries slow operations for maintenance. But there are other reasons for the fall, analysts said.
“By keeping barrels away from the U.S., it is influencing sentiment, keeping inventories in check, and ultimately influencing pricing,” said Matt Smith, lead oil analyst for the Americas at Kpler, referring to Saudi Arabia.
Instead, Saudi Arabia is exporting more crude to China, Smith added. Saudi crude exports to China rose to nearly 1.6 million bpd in September, up from 1.2 million bpd in August and 1.37 million bpd in July, Kpler data showed.
West Coast refiners including Chevron’s CVX.N Richmond, California, refinery and Los Angeles-area refiners took in less Saudi crude in September, Vortexa’s Rohit Rathod said.
U.S. CRUDE EXPORTS FALL
As the U.S. sees fewer crude imports, it has exported less oil to Europe.
U.S. crude exports to Europe fell to 1.86 million bpd in September and 1.84 million bpd in August, from 2.01 million bpd in July, Kpler data showed.
Lower exports to Europe impacted Brent benchmark crude futures prices, some traders said.
Tight supply led the premium for front-month Brent crude futures to rise to as much as $3.26 a barrel above the second month LCOc1-LCOc2, the highest since 2022.
Adi Imsirovic of consultant Surrey Clean Energy and a senior associate at CSIS said tightness in the U.S. crude market is being felt more quickly on international markets than in the past because of the increased role of U.S. crude in the benchmark.
“The fact that it is more direct now is probably a good thing,” said Imsirovic, also a veteran oil trader. “The U.S. market has a more direct link with the key global benchmark than you had before and you can see it right away.”
The introduction in June of U.S. crude grade WTI Midland to help set the price of the dated Brent benchmark assessed by S&P Global Commodity Insights means that the U.S. crude market’s influence over prices abroad has increased.
Dated Brent, used globally for trades, is now based on the price of five North Sea crudes and that of U.S. grade WTI Midland. Large exports of Midland to Europe during the summer helped keep a lid on Brent prices, traders and analysts said.