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US is net exporter of oil for first time in decades

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Via Financial Times

The US has cemented its status as a net exporter in world oil markets, a sharp reversal from past years that could affect its ties to foreign allies. 

The top oil producer and consumer exported 89,000 more barrels of crude oil and refined petroleum products a day than it imported in September, the first full month of a positive oil trade balance since the 1940s, the Energy Information Administration said Friday. Imports exceeded exports by 12m barrels a day a decade ago. 

A variety of factors contributed to the shift: surging production from shale oilfields, the end of a crude oil export ban in 2015 and fuel economy improvements for cars that limited petrol demand even as highway travel rebounded from a recession. 

Along with rises in natural gas output and renewable electricity generation, the oil shipments have pushed the US towards a long-invoked goal of energy independence, according to Rystad Energy, a consultancy. 

A US petroleum trade deficit of $62bn in 2018 — 10 per cent of the country’s trade balance — is on track to become a surplus of hundreds of billions of dollars “thanks primarily to the gargantuan rise of output from the US shale sector”, the consultancy said this week. 

Line chart of Trade balance in crude oil and petroleum products, million b/d showing US becomes a net oil exporter

The small net export figure is the difference between massive flows of oil in each direction: imports of crude oil and petroleum products averaged 8.668m b/d in September, while exports were 8.757m b/d. 

A large portion of the imports consisted of crude oil, which refineries continued to buy even though domestic production reached a new record of 12.5m b/d, EIA data showed. 

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Many US refineries are designed to process heavier foreign oils, while traders sell abroad the lighter oils pumped from shale fields. Some imported crude is refined onshore and exported to other countries in the form of petrol and diesel. 

This week Valero, a US refining company, announced a deal to expand its fuel tank capacity in Mexico, a leading market for petrol exports. 

“We are only expecting exports to continue rising from here, although part of it is being driven by a quality mismatch in crude and refining processing capacity,” said Amrita Sen, chief oil analyst at Energy Aspects. 

The EIA, in its latest short-term energy outlook, forecast net oil and refined products exports likely were 550,000 b/d in October and would be 750,000 b/d on average in 2020. 

The US’s status as a net oil exporter would change its obligations as a member of the International Energy Agency, a body of industrialised countries formed in response to the oil shocks of the 1970s. As an energy security measure, IEA member countries must maintain oil reserves on hand equal to 90 days of their net imports. 

The bulk of US emergency stocks are held in its massive Strategic Petroleum Reserve on the Gulf of Mexico coast. “We encourage the United States to maintain robust SPR volumes to uphold global energy security even as it transitions to a net exporter of oil,” Keisuke Sadamori, the IEA’s energy markets director, told a congressional hearing last month. 

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