Calling the Shots - Exports Are Now the Driving Force in U.S. Crude, Gasoline and Distillate Markets

Sixty percent of crude oil produced in the U.S. is exported, either as crude or in the form of gasoline, diesel, jet fuel or other petroleum products. Sure, a lot of crude and products are still imported, but the net import number is dwindling toward zero — and if you throw NGLs into the liquid fuels balance, the U.S. has been a net exporter since 2020. Yes, exports are now calling the shots in U.S. liquid fuel flow patterns, price differentials, infrastructure utilization and, to a great extent, the winners and losers in crude oil and product markets. It’s going to get way more intense as export economics increasingly dominate which pipelines, refineries and port facilities capture production growth from the Permian and other basins. In today’s RBN blog, we begin a series to explore this revolutionary shift in fortunes, why barrels move where they do and what it all means for U.S. producers, midstreamers, refiners, marketers, and exporters. And a warning! This is a subliminal advertorial for our upcoming xPortCon-Oil conference.

Here's how we calculate our export numbers. In 2022, the U.S. produced 11.8 MMb/d of crude oil and exported 3.5 MMb/d of crude and 3.6 MMb/d of petroleum products — 7.1-MMb/d of crude and products exports in total, or 60% of crude production. Of course, some of those petroleum products are produced from the 6.3 MMb/d of crude oil the U.S. imports or are made available for export due to 1.9 MMb/d of product imports. But even if we add those volumes into the balance, the U.S. was a net importer of only 1.1 MMb/d of crude and petroleum products last year. As U.S. crude production continues to grow, that number is falling inexorably toward zero and beyond — to a world where the U.S. is a net exporter of crude and products no matter how you slice and dice the numbers.

Big-time exports of crude and products are not just about “energy independence” bragging rights. Export markets now determine where crudes flow, which pipelines get the throughput, and the price that different crudes can command in the marketplace. Since the earliest days of U.S. oil and gas, it was domestic refineries and downstream demand that were the dominant market forces in liquid fuels markets. But no longer. Now, with a sizable chunk of marginal barrels moving overseas, exports have taken on a much more dominant market role.