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Can US Port Infrastructure Handle More Crude Exports?

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Americans are exporting raw materials to meet strong demand from Europe following Russia’s invasion of Ukraine and subsequent sanctions against Moscow. US oil may find more buyers overseas in the coming years, but it could test the capabilities of US export infrastructure.


How Much Crude Does the United States Usually Export?


US crude exports averaged 3.7 million barrels per day (bpd) in the four weeks to the end of May, the highest since March 2020, according to the US Energy Information Administration. Recently, exports averaged 3.1 million bpd, making the United States one of the largest crude exporters worldwide.


Where does the United States export oil?


The United States exports mostly from the Gulf Coast from ports including Houston, Corpus Christi and Beaumont in Texas. Corpus Christi is the largest, exporting about 2 million bpd of oil, followed by Houston with about 700,000 bpd, said Matt Smith, America’s principal oil analyst at Kepler.


Kepler data shows that in the first half of 2022, more than 99% of US crude oil exports were from the Gulf Coast.


How much can the United States potentially export?


Analysts say the US Gulf could export about 5 million bpd; Smith said this would create substantial congestion in more shipping channels. However, it would also require an increase in US production.


The weekly record for US crude exports in December 2019 was around 4.5 million bpd. The world’s top producer is pumping out about 12 million bpd, and uses most of that oil domestically.


US ports have been expanding in recent years, including major dredging projects to handle larger tankers that can carry more oil, and some, such as Corpus Christi, can potentially handle more exports.


The Port of Corpus Christi is undergoing an improvement project that, when completed next year, will expand the ship channel to increase US exports. However, this will still require ship-to-ship transfer as the ship channel is not deep enough to fully load Very Large Crude Carriers (VLCCs), which hold about 2 million barrels, in other major ports. are favourites.


Rystad Energy’s Lewis Dixon said Gulf Coast exports are expected to cross 4 million bpd in mid-2023 and reach 4.8 million bpd by the end of 2024.


Where does US oil go?


Kepler Smith said the United States sends most of its crude oil — about 1.4 million bpd — to Europe, about 1 million bpd to Asia, 250,000 bpd to Canada, and other barrels.


US export demand is largely determined by the price of US crude relative to the global benchmark Brent crude. US crude is currently trading at a discount of around $6.80 from Brent, making the US grade attractive to buyers in other countries.


Why is the US exporting oil when local fuel prices are high?


Not all oil produced by the US is optimal for domestic refineries. Smith noted that the United States produces a lot of “sweet” crude oil, which is low in sulfur content, and that its refineries are generally geared to process more “sour”, heavy crude.


This means that more domestic barrels will be sent overseas to refiners who can process them, while American refiners import the barrels best suited for their use.


The United States has long been an importer of crude oil, although net imports have been steadily declining; According to the EIA, the nation imported about 3.1 million bpd net in 2021, more than half of the 6.8 million bpd in 2017.


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