US Crude Oil Exports Surge After Summer Lull
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U.S. crude exports are finally picking up after a muted summer as domestic refineries begin preventive maintenance and the Trump administration threatens tariffs onÌýIndiaÌýfor purchasing Russian oil.
Shipments are expected to surpass 4 million barrels a day in August and September, reaching levels not seen since the start of the year, according to some market participants. The price of West Texas Intermediate crude in Asia is cheaper than comparable Middle Eastern grades, which should keep encouraging sales over the next two weeks as traders start selling oil for loading in October.Ìý
The export market was relatively quiet throughout the summer because of strong domestic demand. Refineries paid up for shale oil as they operated at the highest seasonal rates since 2019, making less crude available for overseas buyers.
An early start of the academic year that has prompted parents to cut short vacationing also has curtailed road trips and encouraged refineries to start maintenance earlier than usual. Students enrolled with both Los Angeles Unified School District and the Houston Independent School District, among the largest in the country, went back to school last week.
(Bloomberg)
U.S. crude exports topped 4 million barrels a day for the first time in eight weeks last week, according to government data released Aug. 20.
Preventive maintenance already has started for TotalEnergies SE's Port Arthur refinery in Texas and Shell Plc's Norco facility in Louisiana. Maintenance at Norco has reduced demand for oils produced in the Gulf of Mexico, weighing on prices of Mars Blend. Earlier this week, prices of Mars on the Gulf Coast reached the lowest in three weeks.
Magellan East Houston crude prices have remained firm in recent weeks, supported by strong demand for September cargoes, even as refinery outages weakened domestic sweet prices. Market participants say the resilience of MEH reflects the pull from overseas buyers and the prospect of continued buildups in inventories at Cushing, Okla.
Midland barrels are largely tracking MEH, with spreads expected to hold tight unless pipeline disruptions emerge. Analysts caution that while MEH could climb as high as $1.50 over benchmark futures in the fourth quarter, its strength may fade if refinery demand normalizes and export momentum slows.
Exporters have another incentive to push U.S. oil to overseas buyers: year-end ad valorem taxes. The levy applies to crude inventories held in Texas on Dec. 31. To avoid the charge, companies try to push barrels to the export market, helping to bring prices down further.Ìý
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