By Arathy Somasekhar
HOUSTON (Reuters) – Oil export growth should stagnate in 2024 after years of strong growth, with domestic production expected to rise by the smallest amount since the pandemic, at a time when global oil demand remains weak .
Crude oil exports from U.S. ports have averaged about 4.2 million barrels per day so far this year, according to U.S. government data. That was up 3.5% from a year earlier, or the lowest percentage increase since 2015, when the U.S. exported its first shipment of domestic crude oil after a 40-year federal ban on domestic crude oil exports ended.
Last year exports grew by 13.5%. They have grown every year except 2021, when COVID-19 crushed global oil demand.
“U.S. crude oil exports are stagnant due to a combination of slowing supply growth and weakening demand, especially from Asia this year,” said Matt Smith, an analyst at energy data firm Kpler.
U.S. oil production is expected to grow just 2.3% this year as shale producers continue to focus on shareholder returns and limit new spending on production.
Offshore production is expected to increase this year as new projects start up, such as Chevron (NYSE:)’s anchor platform in the Gulf of Mexico. But production is expected to increase slowly in the coming years, meaning exports will not benefit this year.
Global oil demand has slowed this year, especially in China, where an ongoing real estate crisis has exacerbated economic concerns. Average daily U.S. crude oil exports to China have fallen by more than a third so far this year, Kpler data shows.
The recent expansion of Canada’s Trans Mountain pipeline has also boosted Chinese imports of crude oil directly from that country’s west coast. Previously, Canadian crude oil was transported to the US Gulf Coast and from there exported to China.
US export volumes to Singapore also fell, while those to India and South Korea rose.
“The demand from Asia has not materialized,” said Rohit Rathod, market analyst at energy researcher Vortexa.
Average daily U.S. exports to Europe also fell about 1% this year from last year as European buyers bought cheaper regional and West African oil.
The only major new market for US crude was Africa, as Nigeria’s Dangote refinery bought barrels of crude from WTI Midland after its start-up early this year.
“Dangote is an outlier when it comes to new refining capacity because it runs primarily on light, sweet crude from Nigeria or the US,” Kpler’s Smith said.
“New refining capacity is being built primarily in OPEC+ countries and Asia, two regions where light and medium sour barrels are more common,” Smith added.
U.S. export volumes could get a boost in coming weeks due to production cuts in Libya and elsewhere and as U.S. refineries begin maintenance, pushing more domestic barrels onto the water.
Refineries that typically import light, sweet crude could replace Libya’s Sharara with the likes of US WTI Midland, trade sources said, after Libya’s National Oil Corporation declared force majeure at the Sharara field from August 7.
