US oil export gains slow as output, global demand turn tepid

Last year, exports grew 13.5%. They have grown every year except in 2021 when COVID-19 crushed global oil demand.

U.S. oil production is set to grow just 2.3% this year, as shale producers remain focused on shareholder returns and limit new spending on production.

Offshore production is expected to rise this year on new project startups, such as Chevron’s Anchor platform in the Gulf of Mexico. But output is expected to ramp slowly over several years, meaning exports this year will not benefit.

Global demand for oil has slowed this year, especially in China, where a protracted property downturn has exacerbated economic worries. Average U.S. daily exports of crude oil to China has fallen by more than a third so far this year, data from Kpler showed.

The recent expansion of Canada’s Trans Mountain pipeline has also boosted China’s imports of crude directly from that country’s west coast. Previously, Canadian crude was transported to the U.S. Gulf Coast and exported from there to China.

U.S. export volumes to Singapore also fell, while those to India and South Korea climbed.

“Asia demand has not materialized,” said Rohit Rathod, market analyst at energy researcher Vortexa.

Average daily U.S. exports to Europe also edged down about 1% so far this year versus last year as European buyers bought cheaper regional and West African oil.

The only major new market for U.S. crude has been Africa, as Nigeria’s Dangote refinery snapped up barrels of WTI Midland crude after its start up early this year.

“Dangote is an outlier when it comes to new refining capacity, in that it is running on predominantly light sweet crude – from Nigeria or the U.S.,” Kpler’s Smith said.

“New refining capacity is being built predominantly in OPEC+ countries or Asia, two regions where light and medium sour barrels are more prevalent,” Smith added.

U.S. export volumes could get a boost in coming weeks on production constraints in Libya and elsewhere, and as U.S. refiners start maintenance, pushing more domestic barrels onto the water.

Refiners that usually import light sweet crude could look to replace Libya’s Sharara with U.S. WTI Midland among other grades, trade sources said, after Libya’s National Oil Corporation declared force majeure on the Sharara field from Aug. 7.