U.S. OIL EXPORTS - 2017: 1.1 MBD
EIA - U.S. crude oil exports increased sharply in 2017 and were sent to more destinations, becoming the third-largest type of U.S. petroleum export. Increased U.S. crude oil exports were supported by increasing U.S. crude oil production and expanded infrastructure, resulting in lower domestic crude oil prices when compared with international crude oil prices.
Exports grew to 1.1 million barrels per day (b/d) in 2017, or 527,000 b/d (89%) more than exports in 2016, in the second full year of unrestricted U.S. crude oil exports. This is the largest single year-over-year increase of a petroleum (crude oil and petroleum products) export since 1920. The annual volume of exports is nearly four times larger than the previous period of material U.S. crude oil export growth in 1980 (Figure 1).
U.S. crude oil exports reached 37 different destinations in 2017, compared with 27 in 2016. Similar to previous years, Canada remained the largest single destination for U.S. crude oil exports, but its share of total U.S. crude oil exports continued to decrease, down to 29% in 2017 from 61% in 2016. U.S. crude oil exports to China accounted for 202,000 b/d (20%) of the 527,000 b/d of the total increase, and China went from being the fourth-largest destination in 2016 to the second-largest destination in 2017 (Figure 2).
Many European nations are among the largest destinations for U.S. crude oil exports, including the United Kingdom, the Netherlands, Italy, France, and Spain. India, which did not receive U.S. crude oil exports in 2016, received 22,000 b/d in 2017, tying with Spain as the tenth-largest destination.
The large increase in U.S. crude oil exports in 2017 now makes crude oil the third-largest petroleum export after hydrocarbon gas liquids (HGL) and distillate exports, representing 18% of total petroleum exports. Before the restrictions on domestic crude oil exports were lifted in December 2015, most of the growth in U.S. petroleum exports was petroleum products – mainly HGLs, such as propane, or distillate fuel and motor gasoline. Previously, the largest share of total U.S. petroleum exports for crude oil was 13% in 1999, but the total volumes of U.S. petroleum exports were significantly lower, less than 1.0 million b/d compared with 6.3 million b/d in 2017.
Increasing U.S. crude oil production and expansions in U.S. pipeline capacity and export infrastructure facilitated increasing U.S. crude oil exports. U.S. crude oil production increased by 463,000 b/d from the 2016 level, to 9.3 million b/d in 2017. At the same time, several new or expanded pipelines came online in 2017 to move crude oil from producing regions, primarily the Permian basin of Texas and New Mexico, to the U.S. Gulf Coast. On the U.S. Gulf Coast, recently expanded crude oil export infrastructure in ports such as Corpus Christi and Houston, Texas, and in ports along the Mississippi River in Louisiana allowed larger volumes of crude oil exports.
A larger discount of domestic crude oil prices, represented by West Texas Intermediate (WTI) crude oil prices, to international crude oil prices, represented by Brent, reflects these dynamics. Spot Brent crude oil prices averaged $3.36 per barrel (b) more than WTI prices in 2017 compared with just $0.40/b more 2016, providing a price incentive to export U.S. crude oil into the international market.
Similar production, infrastructure, and price conditions will be necessary for U.S. crude oil exports to continue increasing. EIA forecasts U.S. crude oil production to increase by 1.38 million b/d in 2018 and the Brent-WTI spread to average $3.96/b. In February 2018, the Louisiana Offshore Oil Port (LOOP)—the only place in the United States where Very Large Crude Carriers (VLCC), the largest and most economic ships to transport crude oil, can fully load—loaded its first crude oil export cargo. Until this point, LOOP was only used to import crude oil. However, almost all other ports in the United States are not deep or wide enough to allow safe navigation of fully laden VLCCs. Widening and deepening U.S. ports and waterways to ensure safe transit of VLCCs is costly and would take many years, making wide-scale expansions of U.S. ports unlikely.
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