US crude oil exports continue to set records this year. US crude exports have risen in this year’s first half by 966,000 b/d to an average of 2.9 million b/d compared with the first half of 2018. Exports of crude oil in June of 3.2 million b/d set a new record-high monthly average. Crude oil export destinations now surpass the number of US crude oil import suppliers, according to US Energy Information Administration.
The main regional destination for US crude oil exports was Asia, receiving 1.3 million b/d in this year’s first half followed by Western Europe with 824,000 b/d. The US exported the most crude oil to Canada, which received an average of 458,000 b/d for this year’s first half, unchanged from first half 2018.
Despite a substantial decrease in exports to China over this year’s first half, Asia had an increase of 472,000 b/d, up 58%. Exports to China averaged only 248,000 b/d, down 64% compared with the same year-ago period. The declining movement of oil exports to China is a continuation of the downward trend during second-half 2018.
Offsetting the lower volumes of crude exports to China were increases in South Korea, India, and Taiwan. South Korea saw the biggest rise in crude oil exports from the US by increasing 278,000 b/d, up 246% over first-half 2018, followed by India with 154,000 b/d, up 114%, and Taiwan with 109,000 b/d, a 133% rise over the same year-ago period.
Western Europe saw noteworthy growth in crude oil exports from the US. The Netherlands rose by 173,000 b/d, up 192% for this year’s first half, and the UK increased by 74,000 b/d, up 53% compared with the same period last year.
Destination of exports
As volumes of crude oil exports have risen, the export destination number also rose. In this year’s first half, the number for US crude oil export destinations rose while sources for US crude oil imports declined. The source number for US imported crude oil was down to 26, a decline of 9 from the average of 35 sources in 2009. At yearend 2015, after limitations for exporting domestic crude were lifted, the destination number for exporting US crude oil rose to more than 30.
US crude oil production has increased 2.9 million b/d from January 2016, the first full month after the crude oil export restrictions were revoked, to this past June. According to the EIA, “During that same period, US crude oil exports increased 2.7 million b/d, the equivalent of 98% of the absolute crude oil production increase.”
Complicated reasons why
The increase in US crude oil production led to rising crude oil export volumes as well as declining crude oil imports. Likewise, the rise in US production of light, sweet crude led to fewer crude oil import sources. Most US refineries are constructed to process medium to heavy sour crude oil.
EIA’s report, “Technical Options for Processing Additional Light Tight Oil Volumes Within the United States,” explains, “US refineries have accommodated much of the growth in US crude oil production since 2010 with two limited or no-investment cost options: displacing imports of crude oil (primarily light crude oil, but also medium crude oil) from countries other than Canada and increasing refinery utilization rates.”
US crude oil export destinations have risen due in part to the need for light, sweet crude oil from international refineries, the “interconnected infrastructure” to export larger volumes of crude oil and the emerging infrastructure for accommodating larger cargo vessels.
Regulations, both international and domestic, are restraining the quantity of sulfur allowed in transportation fuels, therefore limiting global refineries to process more lighter, sweeter crude oil vs. heavy-sour crudes.