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Tim Daiss

Tim Daiss

I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 12 years. I’ve covered oil, energy markets…

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Citi: U.S. To Become World’s Top Oil Exporter

Oil storage

As global oil markets shift their attention from U.S. shale oil production back to a resurgent Saudi Arabia and Russia and geopolitical concerns bearing down on oil prices, Citigroup said last Wednesday that the U.S. is poised to surpass Saudi Arabia next year as the world’s largest exporter of crude and oil products.

The U.S. exported a record 8.3 million barrels per day (bpd) last week of crude oil and petroleum products, the government also said Wednesday. Top crude oil exporter Saudi Arabia’s, for its part, exported 9.3 million bpd in January, while Russia exported 7.4 million bpd, the bank added.

However, it should also be noted that the Citi projection is for both crude and finished (refined) petroleum products, not only crude oil. Saudi Arabia remains the world’s largest exporter of crude, though since January amid the OPEC/non-OPEC production cut agreement that figure has fallen. On April 10, the Saudi oil minister said that the kingdom planned to keep its crude oil shipments in May below 7 million bpd for the 12th consecutive month.

Saudi Arabia has also trimmed its oil production more than 100 percent of the output cuts it agreed to under the January 2017 production deal. In March, Saudi crude production was at 9.91 million bpd, below the deal’s output target of 10.058 million bpd.

Russia, however, also part of the global oil protection cut agreement, increased its crude oil production by 0.2 percent to 10.97 million bpd in March, compared to the previous month and an 11-month high. Related: Electric Planes Could Soon Be A Reality

Though Citi has projected that the U.S. could bypass Saudi Arabia in the export of crude and petroleum products, U.S. crude oil exports have been relatively low compared to other major oil producers since the Obama Administration lifted the ban of American crude oil exports in 2015.

Nonetheless, U.S. crude exports are poised for an upward trajectory. On Wednesday, the U.S. Energy Information Administration said the U.S. crude exports last week increased by 582,000 bpd to 2.331 bpd, an all-time high.

Profiting from arbitrage

The reason for the spike in exports also comes from the price divergence (arbitrage) between London-traded, global benchmark Brent crude and NYMEX, U.S.-benchmark, West Texas Intermediate (WTI) crude prices. As the spread between the two benchmarks widens, WTI trades at a significant cost advantage against Brent as well as other crude benchmarks. The WTI discount is a boon for refineries, particularly in Asia, that need the light sweet crude which yields higher priced refined petroleum products.

U.S. crude is also competing for market share in China against traditional exporters Saudi Arabia, Russia and Iran. China for its part seems to be pivoting away from Saudi oil as the kingdom continues to increase its official selling price (OSP) for Arab Light crude. Related: Oil Prices Slip On Large Crude Inventory Build

On Tuesday, Unipec, the trading arm of state-run Sinopec Group, said that it plans to continue to cut their Saudi Arabian crude oil purchases for June and July loadings, after slashing May shipments by 40 percent. Unipec executives said that Arab Light crude is no longer competitive against other crude blends. Unipec executives have said previously that such prices increases were “unreasonable.” Sinopec is Asia’s largest refiner.

Saudi Aramco is expected to raise its OSPs by at least 50 cents a barrel for June cargoes to track increases in benchmark Middle East crude Dubai this month, Reuters said, citing two traders that participate in the market.

Russia overtook Saudi Arabia as China’s top crude oil supplier in 2017. Saudi Arabia remained the second largest supplier to China in Q1 this year, although its exports were down 5.7 percent from a year ago.

U.S. crude is also finding more buyers in Europe due to the Brent/WTI arbitrage. Market sources have estimated U.S. exports to Europe would average 800,000 bpd between mid-May and mid-June, including 25 million barrels in May overall. One source, according to a report in Hellenic Shipping News, said that of the 25 million barrels expected to land in May, 15 million barrels had already been placed with end-users.

“We are seeing record arrivals from the US to Europe,” a trader said, adding that while all sorts of grades were crossing the Atlantic, WTI Midland represented the largest portion.

By Tim Daiss for Oilprice.com

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  • Alex on May 02 2018 said:
    Don't forget most U.S. refineries are *NOT* configured to process the ultra light shale oil. Most light oil has no choice but being exported overseas to those who are already configured to process it.

    The U.S. exports light oil but imports heavy oil instead. It's a wash. However, Saudi Arabia is a *NET* exporter.

    The discussion of top exporter is *cherry picked truth* and not very meaningful when in fact the U.S. is still a *NET* importer!
  • Jeffrey J. Brown on May 02 2018 said:
    Based on the most recent four week running average EIA data, the US had net crude oil imports of 6.5 million bpd.
  • Avery Mann on May 04 2018 said:
    .....record shipments OUT of the country, yet OUR gas prices are rising every day...just a matter of the oil moguls GREED.
  • Susan Daniels on May 04 2018 said:
    Why are we exporting oil instead of lowering the price of gasoline here?
  • itsy_bitsy on May 04 2018 said:
    This is a headline you WILL NEVER see under a democrat administration!
  • Fleendar the Magnificent on May 04 2018 said:
    So why aren't we set up to process our light shale oil? We need to be using what we extract here to keep OUR prices down.
  • alvin firpo on May 04 2018 said:
    from everything i can glean, the majority of what is considered "shale" oil is in actuality condensate. condensate can be blended with heavy crude (i.e., mexican, and venezuelan oil stock), however, refinery margins typically go down when this is done as gulf coast refineries are designed to process heavy oil. excess produced condensate is then stored in cushing, ok (awaiting an export market) driving down wti prices due to tankage shortages.

    to enable the u.s. to become the world's "top" oil exporter it must import more than half of it's daily demand requirement. to assert the u.s. is a "top" exporter is disingenuous, at best. were the nation's import crude oil supply to be curtailed, the u.s. couldn't produce enough oil for it's own demand, much less export oil based commodities to foreign nations.
  • Bill in Tennessee on May 04 2018 said:
    So if we're exporting oil, why are domestic gasoline prices rising?
  • rick swartz on May 04 2018 said:
    I say if the American companies are not loyal to us then why are we loyal to them. I'm thinking of only getting my gas from the Venezuela gas stations Valero.
  • rick swartz on May 04 2018 said:
    I say if the American companies are not loyal to us then why are we loyal to them. I'm thinking of only getting my gas from the Venezuela gas stations Valero.
  • dipchip on May 04 2018 said:
    Nice to hear from Jeffrey: Where is this in the Article?
    Last 6 week avg per EIA: product and crude imports exceeded net exports by 3.448 Million Brls/day
  • mike alan on May 04 2018 said:
    The bottom line is this. In spite of Obama and the Democrats trying to kill our oil industry, fracking has brought huge wealth into this country. The more we produce, the less we have to import and send money to less than stable nations.
  • Steve Dutwieler on May 04 2018 said:
    So teh U.S. will export oil even as our own gas prices continue to increase due to demand. Shame on the U.S. oil companies for not supporting the U.S. market. and double shame on them for helping OPEC to artificially inflate the price per barrel.
  • Liam Michael on May 04 2018 said:
    If Barky O'Blivet was still in office or worse, the corrupt crone Cankles, this would NOT be happening. No, quite the reverse.
  • james on May 04 2018 said:
    i thought we ran out of oil. jimmy carter said so........
  • Paul Mannhalter on May 04 2018 said:
    Why is gas going up??? Must be just greed...where is TRUMP who is for the people????
  • r on May 04 2018 said:
    How about export a little less so our gas is less in the USA..
  • Dave on May 04 2018 said:
    So why the heck are prices going up here for all of US!
  • David Thomas on May 04 2018 said:
    Time to build refineries here. Oil is in supply but the idiotic US left has fought every new refinery in decades.

    Let's get it done.
  • Hal Slusher on May 04 2018 said:
    First off gas always goes up when they put in summer blend and many states have raised gas taxes. I live in Florida our gas is always summer blend we have not seen gas raise more than a few pennies and yes we can build refineries to deal with all oil we pump. How refreshing to not depend on others for our energy
  • David Hedricks on May 04 2018 said:
    Then why is gas going up? If we have so much of it, why don't we use it here first and then export what's left? Shouldn't our gas be cheap if we use our own oil?
  • flamman on May 04 2018 said:
    Then why is gasoline approaching 3.00 a gallon!?
    The whole system is rigged!
  • Jasonn on May 04 2018 said:
    Why do we need different seasonal gasoline formulas for different parts of the country? I can picture that driving prices up unnecessarily.
  • Red on May 04 2018 said:
    If we have so much oil, why are gasoline prices going up on a nearly daily basis?
  • japesmac on May 04 2018 said:
    Winning. Haha... secular leftist, selfish, racist, losers.
  • Kenneth Wilkinson on May 04 2018 said:
    Why are we involved with OPEC? Lets sale oil at our price and a lower price for Americans. This is Capitalism. Opec is not Capitalism, it is squeezing others for money.
  • Chris Long on May 04 2018 said:
    Exporting is stupid. Enough demand here to keep it all at home.
  • Mark on May 04 2018 said:
    Not a good idea.. my philosophy on oil production... use theirs first!
  • Jason Lay on May 05 2018 said:
    I thought US oil production would be used for domestic purposes at a lower price. You did too. Ha. Is that the real purpose of the Keystone pipeline? If so- there had better not be anymore oil super tankers from Arabia.
  • Leighton on May 05 2018 said:
    Someone said they would only buyVenuezalan oil VALERO, but sorry to bust their bubble, but CITCOin VENEUSALAN,,, , NOT VALERO. VALERO is an AMERICAN company, uses ONLY us oil.
  • perry dice on May 05 2018 said:
    how many years did we hear all about "becoming energy independent"? now here we are exporting it.... now remember always trust your republicans.
  • Robert Reilly on May 05 2018 said:
    Since the U.S. government is opening "government " owned lands for oil drilling such as ANWAR. why can U.S. oil companies limit the price of oil sales to refineries in the USA for gas and oil products to be consumed by U.S. Citizens. I've been to the Middle East and I can honestly swear that the people pay very little for their gas at the pumps regardless of the price per barrel!
  • RICHARD PAYNE on May 05 2018 said:
    Its all BS. Our prices for gasoline started going up the exact time of the tax cuts. They get top dollar when they export the crude and now get top dollar at home here.
  • RICHARD PAYNE on May 05 2018 said:
    Gas prices are $3.09 a gallon here in Utah.
  • BS on May 05 2018 said:
    All you geniuses who can't figure out why oil price is up do you have any idea how much money it takes to frack?
  • Rodent Rockefeller on May 05 2018 said:
    That doesn't do me any good as long the price of gasoline keeps going up...Reminds of the Republican party, give us the majority and we'll fix everything.
  • James on May 05 2018 said:
    Then why the hell are we paying $3/gallon?

    The rest of the world can pay the profits for Big Oil.

    If it's a lack of refining capacity, then build a few!
  • Steve on May 05 2018 said:
    Would any one of you fools explain your theories that exporting crude to disperse particular grades of crude where it is needed increases the price of domestic gasoline? If you want abundant energy, support the oil & gas exploration & production companies and quit bitchin’ about prices. Only profit leads to growth; without it there will be none. Why would anyone think any company works for any reason other than profit, at the highest possible margin. Finally, the crushing stranglehold of the world wide cartel is lessening; prices are rising, at least for crude, and approaching a level sufficient to promote and sustain continued recovery of future reserves to replace current production insuring future availability. May crude and nat gas prices fly “to the moon, Alice” and revitalize our domestic petroleum industry. Many domestic producers are still struggling to survive in this 4th year of artificially low pricing.
  • bhharp on May 05 2018 said:
    Then pray tell me why gas prices are so high ?????
  • BigGrease on May 05 2018 said:
    Sorry Rick, but there is no connection between Valero Energy Corp. and Venezuela or its state-owned oil company, PdVSA, as stated by Bill Day, director of Media Relations for Valero.
  • BigGrease on May 05 2018 said:
    Sorry Rick, but there is no connection between Valero Energy Corp. and Venezuela or its state-owned oil company, PdVSA, as stated by Bill Day, director of Media Relations for Valero.
  • Dave on May 05 2018 said:
    We need to knock off oil exports until we get our own prices down.
  • Avery Mann on May 05 2018 said:
    As other commentators mentioned, if we are in such great supply to export our oil, then WHY are prices of gas going up to almost $3.00/gallon ??? Don't even mention the idea of changing blends for the season......just another excuse for more GREED !!!!!!!!!!!!!!
  • n on May 05 2018 said:
    https://www.forbes.com/sites/rrapier/2016/01/15/president-obamas-petroleum-legacy/#255f50bdc10f
  • Abe Black on May 05 2018 said:
    As the exports increase from the US, the consumers pay a higher price for oil.
    The exports should be stopped to keep our economy moving upward instead of becoming stagnated by Congress opening the oil valve to international countries.
  • eltee on May 05 2018 said:
    So now the oil companies can get back to screwing the American driving public....what a deal; they win and....yep, they win again
  • Roy on May 05 2018 said:
    Obama stated early in his tenure that "energy prices will necessarily skyrocket under my administration", so looks like Obama was not responsible for all this good news as the media is portraying.
  • Philly on May 05 2018 said:
    Who the heck makes these moronic decisions? Export petroleum products while continuing to import them from countries that hate us? Go for a bigger share of the Chinese market? Why, to fuel their bases on the Sratly Islands? Will China pay in dollars or yuan? Export if so we can run out of domestic oil before Russia?
    There are a hundred more reasons that this is a stupid idea. I think Valerie Jarrett and John Kerry
    negotiated this insanity.
  • Phillhy on May 05 2018 said:
    Export oil? Great idea.
  • Jeffrey J. Brown on May 05 2018 said:
    Once more some facts:

    First, what the EIA calls "Crude oil" is actually Crude + Condensate (C+C). Condensate is a very light oil, similar to gasoline, with almost not distillate content (diesel, jet fuel, etc.).

    Based on the most recent four week running average EIA data, US refineries had C+C inputs of 16.8 million bpd. On a gross basis, we imported 8.4 million barrels of C+C, actually mostly crude oil in this case. So, on a gross basis, US refineries are dependent on foreign oil for half of the C+C inputs into US refineries.

    If we take into account gross C+C exports (probably mostly very light crude and condensate), net C+C imports were 6.5 million bpd (again, mostly actual crude oil).

    So, regardless of whether we look at it on a net or gross basis, US refineries are dependent on foreign sources of crude oil for about 40% to 50% of the C+C inputs into US refineries.

    In my opinion, crude oil prices are going up because actual global crude oil production has been approximately flat to down since 2005, and because Global Net Exports of oil (GNE, total petroleum liquids in this case) have been down since 2005, with the Chindia region consuming an increasing share of GNE.

    I estimate that the volume of GNE available to importers other than China & India fell from 40 million bpd in 2005 to 33 million bpd in 2016.
  • Larry on May 05 2018 said:
    Exporting American oil has nothing to do with the price of oil, it's a traded commodity just like corn, wheat and such. OPEC is trying to slow production to drive up the price of oil. Venezuela oil fields have all but dried up due to their government. That oil is off the table now.
    Less oil in the world produced means higher prices, got nothing to do with How much America produces.
    Oh why no new refinerys? Ask Obama and the Democrats they put so many regulations in place nobody can build. It's going to take Trump time to get rid of the stupid Obama regulations.
  • Joseph on May 06 2018 said:
    Why don’t you give net oil trade balance figures? Like at https://www.eia.gov/dnav/pet/pet_move_neti_a_EP00_IMN_mbblpd_m.htm
  • John Brown on May 08 2018 said:
    Its odd that with red lights flashing, alarms going off, and horns sounding Saudi Arabia does seem to understand that it drive to push oil price to $88 plus is having immense impacts. One has to wonder what their strategy is. $88 a barrel oil is going to impact demand, set other non-OPEC/Russia producers on fire, in a good way, and have everyone scrambling to see how renewables and ever lower price points can be pulled even faster into the mix for the long term. I'd complain about artificially high prices, but this is going to push the world to go where it needs to go much faster than otherwise. The days of scarce oil and few alternatives is ending, and Saudi Arabia is speeding that up by years, even decades.
  • joe on May 10 2018 said:
    Trump likes to play hard ball, forget Europe or the rest of the world. What if the Middle East ramps up oil production, flooding the market and bringing oil prices to rock bottom. Wonder if the American/Canadian oil producers will still be buddy buddy with Mr. Trump. Could be the collapse the the American Empire. Now that would be a very HARD BALL!
  • James Rose on May 27 2018 said:
    Might want to correct this sentence: "On Wednesday, the U.S. Energy Information Administration said the U.S. crude exports last week increased by 582,000 bpd to 2.331 bpd, an all-time high."
  • Russ on June 01 2018 said:
    At 3$ a gallon US gasoline is still very cheap. In europe we are paying $6+

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