U.S. oil exports set five new monthly records following record oil production, Russian sanctions
(Bloomberg) – One major beneficiary of sanctions on Russian and Venezuelan oil? U.S. suppliers who’ve muscled their way into markets once dominated by OPEC and its allies.
U.S. oil exports have set five new monthly records since Western nations began imposing sanctions on Russia in 2022. And with trade restrictions on Venezuela set to renew in April, American barrels are beginning to displace sanctioned crude in India, one of the biggest buyers of illicit oil.
The shift underscores the extent to which sanctions have helped American crude capture market share around the world. While U.S. oil has long been the world’s go-to flex barrel, the disruption of energy flows after Russia’s invasion of Ukraine created new pull for American barrels. Shipments to Europe and Asia surged in the aftermath, transforming the US into one of the world’s largest exporters.
Record production from the U.S. — coming just as OPEC and its allies curb their own supply — has also helped American producers gain a bigger foothold in overseas markets. Physical oil prices are reflecting that, with WTI in Houston trading near the highest levels since October and sour benchmark Mars not far behind.
“U.S. production is going up and OPEC and Russian production is going down — so the U.S., by definition, is going to have more market share,” said Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC.
India — the third-largest crude importer and Moscow’s second largest buyer after China — is the latest market seeing an influx of U.S. oil. American shipments to India are set to jump in March to the highest in nearly a year, according to data from crude tracking firm Kpler.
At the same time, Russian oil imports have fallen by about 800,000 bpd since last year’s high point, Bloomberg tanker tracking shows. Russian shipments may decline further with Indian oil refiners no longer accepting cargoes from tankers owned by state-run Sovcomflot PJSC, which was recently sanctioned by the U.S.
While U.S. supplies can’t fully replace Russian crude due to differences in oil quality and voyage times, “there’s definitely a bit of a pivot there towards pulling in more U.S. crude,” said Matt Smith, lead Americas oil analyst at Kpler.
Indian refiners have also halted purchases from Venezuela ahead of the expiry of a U.S. sanctions waiver in the middle of next month. Those supplies are now poised to hit the lowest this year.
Even before the latest raft of trade restrictions, the U.S. was quickly becoming a key supplier to Asia, where U.S. imports hit an annual record last year, according to the EIA.
And in Europe, which has largely eschewed Russian oil since the war in Ukraine began, U.S. shipments will hit a record 2.2 MMbpd in March, according to vessel tracking data compiled by Bloomberg.
To be sure, not all of the pull from Europe is due to sanctions. Imports into the Netherlands have surged since West Texas Intermediate was included in the dated Brent benchmark last year, ensuring U.S. crude would become a part of the European diet.
But shipments increased markedly after the imposition of sanctions as European nations sought non-Russian sources of supply. U.S. imports to France jumped nearly 40% from 2021 to 2023, while those to Spain rose 134%.
“As U.S. production continues to gradually grind higher, every incremental barrel that’s being produced is likely going to be exported,” said Kpler’s Smith.
