Oil is on track to be the largest export item for the United States this year for the first time in history, highlighting the growing influence of U.S. oil production and exports on the global oil market.
Rising U.S. crude oil production in recent years and growing exports after the ban was lifted in 2015 have made U.S. oil an increasingly important commodity on the market, especially after the Russian invasion of Ukraine and the ban and sanctions on Russian crude in the West.
U.S. oil supply offset some of the OPEC+ cuts in the first half of this year as it is set for record-high production in 2023 and 2024. America's crude oil production is expected to average 12.92 million barrels per day (bpd) this year and 13.12 million bpd next year—new record highs, the Energy Information Administration (EIA) says in its October Short-Term Energy Outlook.
Oil exports are also at a record high, averaging 3.99 million bpd in the first half of 2023—up by nearly 20% from the first half of 2022.
In terms of both volumes and value, U.S. oil exports were the biggest export of all categories in America's trade with the world through August this year and are likely to be such for the full year 2023—for the first time ever, according to an analysis by Ken Roberts at WorldCity, a company that tracks U.S. exports based on U.S. Census Bureau data. In August alone, the value of U.S. oil exports, at $10.3 billion, had the highest share of all American exports with 6%, followed by gasoline and other fuels, per WorldCity data. In terms of tonnage, oil's share was also the highest—at 24%, followed by LNG and gasoline and other fuels.
According to the analysis by WorldCity's Roberts published in Forbes, "the primary oil category will be the United States' top export when 2023 figures are released early next year."
Since 2015, when the U.S. lifted a ban on crude oil exports – which had previously gone only to Canada – American oil exports have soared alongside the jump in production. The jump has been more pronounced in the past two years, thanks to a growing global appetite for competitively-priced barrels amid lower supply from OPEC+ and the embargo on Russian crude.
Despite the fact that U.S. crude is mostly of the lighter and sweeter variety, unlike the top grades from Russia and the Middle East, America's exports have been offsetting part of the OPEC+ cuts in recent months.
In the first half of 2023, Europe was the top destination for U.S. crude oil exports by volume, at 1.75 million bpd, led by exports to the Netherlands and the UK, the EIA says. Asia came second, taking in 1.68 million bpd, led by U.S. oil exports to China and South Korea. The United States also exported significantly smaller volumes of crude oil to Canada, Africa, and Central America and South America.
In less than a decade since the export ban was lifted, U.S. oil has become so significant for the global market that WTI Midland was added in June to the Brent basket of crude oil grades that is used as a benchmark for pricing the world's most traded oil contract.
The reason WTI Midland is becoming more and more important in the Dated Brent assessment is, again, the volume of U.S. crude being shipped abroad, which has averaged around 4 million bpd since the start of the year.
With U.S. oil in demand in Europe and Asia when arbitrage allows, America's oil exports have jumped in the past two years and are set to be the biggest U.S. export item in 2023.
By Tsvetana Paraskova for Oilprice.com