Europe has overtaken Asia as the biggest buyer of U.S. crude oil, importing 213.1 million barrels over the first five months of the year, while Asia imported 191.1 million barrels, Bloomberg reported, citing Census Bureau data.
This is the first time in six years that Europe has been a bigger buyer of U.S. crude than Asia.
The change resulted from the redirection of oil flows following Russia’s invasion of Ukraine and the sanctions that the European Union and the United States imposed on Moscow in response.
However, U.S. oil might not be enough to fill the gap left by Russian oil once the European Union embargo on the latter takes effect later this year. According to one energy analyst, this means the EU would need to step up imports from Asia.
Jonathan Leitch from Turner Mason & Company believes that the shortfall in oil imports from Russia to the EU could be more than 700,000 bpd, and the EU would need to find new sources to plug the gap.
China and India could be among these sources, Leitch told UBS in a recent call, but both countries are putting limits on exports as they seek to lower domestic oil and fuel prices. Related: Could Argentina’s Dead Cow Shale Patch Help Solve The Energy Crisis?
What the suggestion means, however, is that neither the United States nor the Middle Eastern OPEC producers could step in fast enough to fill the gap.
According to Christopher Haines from Energy Aspects, who spoke to Bloomberg, the substantial rate of U.S. oil imports into Europe will remain unchanged over the short term as the EU reduces its reliance on Russian oil.
The problem, both for Europe and Asia, is that U.S. production of crude is not growing fast enough to respond to demand in the two regions. This, coupled with doubts about OPEC’s ability to boost production, suggests prices are likely to remain elevated.
By Irina Slav for Oilprice.com
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