Specifically, the rise in US cruse oil exports was due to the increasing US crude oil production and infrastructure changes.
US crude oil production increased 17% to 10.9 million b/d in 2018, with U.S. Gulf Coast states—the departure point for more than 90% of U.S. crude oil exports—producing 7.1 million b/d.
In the beginning of 2018, the Louisiana Offshore Oil Port (LOOP) in the Gulf of Mexico was modified to enable the loading of vessels for crude oil exports. LOOP is currently the only U.S. facility capable of accommodating fully loaded Very Large Crude Carriers (VLCC), vessels capable of carrying approximately 2 million barrels of crude oil.
Credit: EIA
LOOP was modified to allow exports. Therefore, the rise in cargo scale resulted US crude oil exports to surpass the 2 million bpd for 25 weeks in 2018, in comparison to just 1 week in 2017.
During 2018, Asia was the biggest regional destination for U.S. crude oil exports, followed by Europe, while, as in previous years, Canada was the largest single destination for U.S. crude oil exports. Canada received 378,000 b/d of U.S. crude oil exports, representing 19% of total U.S. crude oil exports in 2018.
South Korea surpassed China to become the second-largest destination for U.S. crude oil exports in 2018, receiving 236,000 b/d compared with China’s 228,000 b/d.
Moreover, in summer 2018, as part of ongoing trade negotiations between the US and China, China temporarily included U.S. crude oil on a list of goods potentially subject to an increase in import tariffs. Around that time, the difference between the international crude oil benchmark Brent and the U.S. domestic price West Texas Intermediate (WTI) futures prices narrowed: Brent prices went from $9 per barrel (b) higher than WTI in June to $6/b higher than WTI in July.
Credit: EIA
Concluding, the rapidly narrowing price discount of U.S. crude oils versus international crude oils and the potential for higher import tariffs caused China’s imports of U.S. crude oil to slow. As U.S. crude oil exports to China fell, exports to South Korea, Taiwan, Canada, and India increased. Ultimately, the rate of crude oil exports to all destinations in the second half of the year (2.2 million b/d) was higher than in the first half (1.8 million b/d).
