As a major net oil importer, US foreign policy has traditionally reflected the need to protect extended international oil supply chains. Over the last decade, even over the last five years, the country’s oil import/export profile has changed dramatically; net imports of crude oil and products have fallen from 5.6 million b/d in July 2014 to 1.6 million b/d in July 2019.
Now far less dependent on energy imports, the fear was that the US would withdraw from its reduced international interests, leaving power vacuums in its wake. This did occur to some extent, but the oil market is now more dominated by US policy decisions than ever as Washington prosecutes a trade war with China and takes a hard line on Iran.
Part of the reason for this dominance is that US gross imports of crude oil and products have barely changed in volume over the last five years, while rising LNG exports provide another point of US entry into world energy markets. The US has not become so much ‘energy independent’ as more involved in international energy trade, albeit on a more balanced basis.
The growing exposure of the domestic US economy to international trade, of which energy is one element, is a key concern currently expressed by the more dovish members of the Federal Reserve’s Open Market Committee. The flipside is that the oil market equally is now more exposed to the politics of US presidential elections.
The latest assessment…