Tuesday, October 3, 2023
HomeHeadlinesUS set to ship record crude into 2023 as energy crisis deepens


To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

US set to ship record crude into 2023 as energy crisis deepens

US crude sales overseas are set to hit fresh records through next year as American oil increasingly takes market share in Europe.

Earlier this month, weekly government figures showed an unprecedented 5 million barrels a day of US crude being exported. Shipments are poised to average over 4 million barrels a day over the next few months and into next year, according to the most optimistic in the oil industry.

In a world grappling with one of the worst energy crises in history, the US is steadily becoming the go-to supplier of incremental barrels. It’s likely to remain in that position as OPEC+ spare capacity is limited and the EU looks to wind down most Russian crude purchases in December. Fuel prices soared after Russia’s invasion of Ukraine upended flows, while “extreme” volatility in the oil futures market as a result of low liquidity has prompted Saudi Arabia’s oil minister to consider further supply cuts despite shortages in consuming nations.

US suppliers that have captured market share across Europe will likely hold onto it over the next two years as other producers, including those in the North Sea and West Africa, have not been growing their output as steadily, said Conor McFadden, head of oil for Europe at Trafigura, among the biggest exporters of US crude.

While the end of American reserve oil releases this fall might slow exports briefly, it’s unlikely to dent these mammoth outflows long term, according to a poll of industry analysts. US drillers have been growing production, even if at moderate rates, and the country’s refining capacity is not expected to expand, leaving more oil for export. In fact, weekly exports have exceeded 4 million barrels a day for consecutive weeks for the first time since the export ban was lifted at the end of 2015, according to the latest Energy Information Administration data released Wednesday.

Annual US crude shipments abroad are expected to average from 3.3 million barrels a day to as high as 3.6 million barrels a day this year, from nearly 3 million in 2021, according to oil analysts at ESAI Energy, Rapidan Energy Group and Kpler. Outflows are likely to average as much as 4.3 million next year, according to ESAI oil analyst Elisabeth Murphy.

Much of that will cater to Europeans drawing new supply lines ahead of the December boycott of Russian energy by the region’s trade bloc. Currently, the US accounts for only about 16% of Europe’s waterborne crude imports, up slightly from 15.3% before the war, said Vortexa senior oil market analyst Rohit Rathod.

And there’s room to capture more Russian market share. “EU-27 countries are still taking about 1.1 million barrels a day of Russian seaborne crude,” said Kpler oil analyst Matt Smith.

It’s not just about filling Europe’s gaping energy hole left behind by Russia either. American flows already are replacing barrels from other traditional suppliers to Europe, including Kazakhstan where its flagship CPC crude has seen multiple export disruptions because of technical problems.

US volumes are nipping into West Africa’s market share in Europe as well as helping offset disrupted crude flows from Libya due to politically-driven production outages, said Hunter Kornfeind, an oil market analyst at Rapidan.

European refiners have become more comfortable using American oil that is shipped reliably and stably, Trafigura’s McFadden said. “When the world’s energy supply chains got so stressed, this was the crude that filled the hole. When Europe didn’t know who they were gonna buy from they went to Midland because they know it will arrive,” he said.

The influx of US barrels has also pressured regional European crudes. At the start of the week, Ekofisk crude, a light-sweet grade in the North Sea that competes with US supplies, was trading about $3.50 above Dated Brent. That compared with about $7 a month earlier. Meanwhile Forties crude, another North Sea grade, was trading at a discount of 70 cents to Dated Brent compared with a premium of more than $5 a month prior.

Looking ahead, purchases from Asia are also key in keeping US crude exports elevated. Over the past two months, Asian countries have scooped up large volumes of American oil, as competition with Middle Eastern supplies heats up. Even so, greater volumes of Russian oil are still headed to China and India since the invasion of Ukraine.

“The long-term trend in a world that needs more oil is that the US is going to be exporting more,” McFadden said.

Source: Bloomberg

Related Posts


Finance & Economy
Shipping News

TOP Ships Announces Reverse Stock Split

TOP Ships announced that it has determined to effect a 1-for-12 reverse stock split of the Company’s issued common shares. The Company’s shareholders approved the...

Carnival Earnings Outlook Misses While Fuel Costs Near 15-Year High

Carnival Corp. posted a profit for the first time since 2020 but issued a fourth quarter earnings outlook that missed Wall Streets’ expectations as...

Sphinx Investment Corp Increases Stake in OceanPal

On September 28, 2023, an OceanPal SEC filing revealed that Sphinx Investment Corp. had raised its ownership in OceanPal, now holding a substantial stake...

Star Bulk Announces the Repurchase of 10 Million of Its Common Shares

Star Bulk announced that it entered into a Repurchase Agreement (with OCM XL Holdings, LP, a limited partnership incorporated in the Cayman Islands, pursuant...

Trafigura announces executive leadership changes

Trafigura Group Pte Ltd. has announced an evolution of its executive team to further strengthen leadership and focus across its global activities during a...

Baltic index snaps 4-day winning streak as capesize rates slip

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index scales 11-month peak on strong capesize rates

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry...

Baltic index scales over 9-month high on capesize surge

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry...

Baltic index rises to over 4-month high on stronger capesize rates

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry...

Houston-Japan VLGC freight rates reach multi-year high

VLGC freight rates from Houston to Chiba, Japan, reached $245/mt Sept. 21 for the...

Ukraine: 5 More Cargo Ships Head For Black Sea Ports – report

Five more ships are on their way to Ukrainian sea ports using a new corridor opened to resume predominantly agricultural exports, an alternative arrangement...

Piraeus Port reports strong H1 2023 results

The Piraeus Port Authority SA, which operates Greece’s biggest and busiest port, reported a 48.8-percent increase in pre-tax earnings for H1 2023 – 49.4...

Greece names Thessaloniki port operator preferred bidder for Volos port

Greece’s privatisation agency has named the operator of Thessaloniki port as the preferred bidder for acquiring a 67% stake in the port of Volos,...

Drewry: Port Throughput Index Down 2.1% in July

The Global Container Port Throughput Index fell 2.1% MoM in July 2023, with the small rises recorded in Africa and Oceania having been insufficient...

Vopak: Agreement with Infracapital on sale of Rotterdam chemical terminals

Vopak announces that it has reached an agreement with Infracapital on the sale of its three chemical terminals in Rotterdam (Botlek, TTR and Chemiehaven)...