The US crude oil export growth is expected to plateau by 2024, after several years of steady increase. The domestic oil output is forecasted to experience minor growth this year, amid global sluggish demand for oil. US crude oil exports have been averaging around 4.2 million barrels per day this year, marking a 3.5% increase from the previous year, the lowest percentage growth since 2015. This slow growth is attributed to the impact of COVID-19 on global oil demand last year.
Analysts suggest that the plateauing of US crude oil exports is a result of declining supply growth and weaker demand, particularly from Asia. US oil production is projected to grow by only 2.3% this year, as shale producers focus on shareholder returns and limit new investments in production. However, there is expected growth in offshore production due to new project startups, such as Chevron’s Anchor platform in the Gulf of Mexico. Yet, the ramp-up of offshore output will be gradual over the next few years, limiting the immediate benefits to exports this year.
Global oil demand has slowed down this year, especially in China, where economic concerns were exacerbated by a prolonged property downturn. As a result, the average daily US crude oil exports to China have decreased by over a third so far this year. Additionally, the expansion of Canada’s Trans Mountain pipeline has facilitated China’s import of crude directly from Canada’s west coast, shifting away from previous routes through the US Gulf Coast. Although export volumes to Singapore have dropped, they have risen for India and South Korea.
On the other hand, the European market has seen a slight decline in average daily US crude oil exports by about 1% this year compared to last year, as European buyers favored cheaper regional and West African oil. However, Africa has emerged as a new major market for US crude oil, with Nigeria’s Dangote refinery purchasing WTI Midland crude following its launch early this year. This refinery predominantly operates on light sweet crude, a trend not common among new refineries being built in OPEC+ countries or Asia.
It is anticipated that US export volumes could see an uptick in the near future due to production constraints in Libya and other regions, as well as US refiners undergoing maintenance which would free up more domestic barrels for export. With the force majeure declaration on Libya’s Sharara field, refiners that typically import light sweet crude might consider replacing it with US WTI Midland or other grades. This shift in sourcing could provide a boost to US crude oil exports in the coming weeks, facilitating increased exports to various global markets.
