How High US Crude Exports Are Affecting the Crude Tanker Industry
US crude oil exports
Daily exports of US crude oil have now almost doubled the levels seen in 2010. Oil exports jumped from 2.4 million barrels per day to 5.2 million barrels in 2016. US crude oil exports rose 12% in 2016, according to the EIA (US Energy Information Administration).
Since December 2015, US has been permitted to export domestically produced crude oil. Previously, only Canada had been exempt from US crude oil export restrictions. After the ban was lifted in December 2015, the United States exported oil to 26 different countries.
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An all-time high
Recently, US crude oil exports reached an all-time high of 1.3 million barrels per day. On the one hand, US oil production is rising, and on the other, due to OPEC’s (Organization of the Petroleum Exporting Countries) production cut, production in the Middle East has been capped. Due to this cut, the spread between WTI (West Texas Intermediate) and Brent crude oil has increased, making importing oil from the US even more competitive.
For years, Canada has been the top destination for US crude exports. However, in February 2017, China grabbed this top spot from Canada. As OPEC has cut its oil production, Asian countries have turned to the US for their oil needs.
US crude going to Asia travels primarily on Suezmax and VLCC (very large crude carrier) vessels, and the Atlantic Basin to Asia is one of the longest routes for crude tankers. Longer route times keep tankers busy for more days at a time and tightens supply. Increased ton-mile demand is always a positive for crude tanker companies like Navios Maritime Midstream Partners (NAP), Nordic American Tankers (NAT), Euronav (EURN), Frontline (FRO), and Tsakos Energy Navigation (TNP).