Last week, the United States came close to becoming net exporters of crude oil for the first time since World War II. Shipments surged to nearly hit a historic record, driven by the demand from Asian and European buyers urgently seeking to replace Middle Eastern flows disrupted by the war with Iran.
The conflict between Iran, the United States, and Israel caused the most severe disruption ever recorded in the global energy market. Iranian threats to maritime traffic paralyzed transit through the Strait of Hormuz, where around a fifth of the world’s oil and gas supply typically passes through.
Refiners in Asia and Europe, dependent on these supplies, scrambled for all available alternative cargoes, boosting the demand for U.S. crude, the world’s top producer.
However, analysts and traders point out that the United States is quickly approaching its maximum export capacity.
According to government data released on Wednesday, net crude imports – the difference between imports and exports – decreased by only 66,000 barrels per day (bpd) last week, a historic low since the start of the weekly statistical series in 2001. Meanwhile, exports climbed to 5.2 million bpd, a seven-month high.
On an annual basis, the United States has not been a net exporter of crude since 1943.
The surge in U.S. exports reflects the fact that buyers from the Atlantic basin and Asia are seeking increasingly distant sources of supply, with regional price differences offsetting transport costs, explained Janiv Shah, vice president of oil markets at Rystad.
Countries like Greece have purchased American crude for the first time in recent months.
According to maritime tracking service Kpler, around 2.4 million bpd, or 47% of last week’s U.S. exports, headed to Europe. Asia received approximately 1.49 million bpd (37%), up from 30% a year earlier.
Key buyers include the Netherlands, Japan, France, Germany, and South Korea.
A ship carrying 500,000 barrels also reported its destination as Turkey, which would mark the first U.S. export to the country in at least a year, according to Kpler.
At the same time, U.S. imports plummeted by over a million bpd to stand at 5.3 million bpd last week. The United States continues to import heavily as its refineries are configured to process heavier and more sulfur-rich grades of crude than the light sweet crude they produce domestically.
Disruptions in the Middle East have widened the Brent premium over U.S. West Texas Intermediate (WTI), reaching as high as $20.69 per barrel last month. This price differential has discouraged U.S. imports while making domestic crude extremely competitive for European and Asian refiners.
The price of physical cargoes for immediate delivery in Europe hit a historic peak near $150 per barrel on Monday, while prices for Africa also reached new highs, according to LSEG and traders’ data.
U.S. exports are expected to be around 5.2 million bpd for April, estimated Matt Smith, an analyst at Kpler, noting that monthly flows are now reaching capacity limits.
The United States can export up to 6 million bpd, according to traders and analysts, who highlight constraints related to pipelines and vessel availability. The annual record stands at 5.6 million bpd in 2023.
“The market is testing the export ceiling with 5.2 million bpd last week. Each additional barrel costs more in logistics and freight than the previous one,” said Bekzod Zukhritdinov, a trader based in Dubai.
Drawdowns of medium sour crude from the U.S. Strategic Petroleum Reserve could release more light grades for export, noted Rystad’s Janiv Shah. However, he cautioned that a shortage of tankers and rising freight rates could cap this trend.
About 80 empty supertankers were heading towards the Gulf of Mexico on Wednesday to load crude for April and May, said Rohit Rathod, a senior analyst at Vortexa.
