Analysis: U.S. Crude Exports Set to Surge on Supply Crunch


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Buying interest in U.S. crude oil could reach new highs, 
spurred by its lowest price against Brent in six years, as Asian refiners 
scramble to replace shut in flows from the Persian Gulf.

   The Brent-WTI spread grew in the first days of the war before ballooning in 
mid-March once millions of barrels of production in the Middle East were forced 
shut by rapidly filling inventories as tanker traffic through the Strait of 
Hormuz came to a virtual standstill.

   From a difference of $4.43 bbl on March 13 between WTI and Brent's 
front-month contracts, the gap rocketed to $13.87 bbl by March 20 in U.S. 
crude's favor. This occurred as international pricing for oil rapidly outgrew 
that for light sweet U.S. crude, which was unaffected by the supply crisis in 
the Middle East.

   The U.S. Gulf Coast's export capacity for oil will likely be stretched to 
limits in the coming weeks if WTI's steep discount to Brent and other grades 
continues to hold.

   U.S. crude exports typically follow a widening Brent-WTI higher with a 
four-week delay. This time around, the effect is likely to be seen sooner, as 
the flood of interest in U.S. crude is not a matter of bargain hunting, but of 
refiners securing supply to keep operations running. More than three times as 
many cargoes have been booked from the U.S. Gulf Coast to Asia this month 
compared to February, according to Platts.

   Notwithstanding the current phenomenon, U.S. crude oil exports have remained 
far from all-time highs. Exports in 2025, in fact, recorded the first 
year-on-year decline since 2021, which itself was an exception from a decade 
and a half long trend. In December -- the last month with available EIA data -- 
they averaged 4.15 million bpd, 10% below the record-high 4.62 million bpd 
registered in December 2023.

   Sustaining a pace above 5 million bpd for a prolonged period is feasible 
from a loading capacity perspective, but may push the capacity boundaries of 
pipelines transporting crude oil from the Permian to terminals on the U.S. Gulf 
Coast.

   On average, these pipelines were already operating at more than 90% of 
capacity. Vast storage space in the region, however, will buy fast-paced 
exports some time before a logistical bottleneck emerges.

   High crude prices are likely to drive domestic production higher. This, 
however, typically happens with a roughly three-month delay given the time 
needed from sealing the investment decision to extracting the first barrel.

   High commercial inventories may help bridge this gap if international demand 
were to stay elevated, even as domestic refiners are ramping up operations 
ahead of the peak summer driving season.

    




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