Double-Edged Sword – Refinery ‘Capacity Creep,’ Falling Inventories May Limit U.S. Crude Export Surge

U.S. crude oil production averaged a record 13.6 MMb/d in 2025, a mark nearly 1.6 MMb/d higher than 2023, but crude export volumes remained remarkably stable — at or very near 4.1 MMb/d on an annual basis — over the same three-year period. Export terminals along the U.S. Gulf Coast (USGC) could have been sending out much more, as evidenced by the recent, Iran-conflict-related surge to nearly 6 MMb/d, but there’s often been a better, more profitable alternative: running that incremental oil through USGC refineries whose capacities have been increasing in subtle but important ways. In today’s RBN blog, we discuss these “capacity creep” expansion projects and their effect on U.S. crude oil and refined product exports.

Unsurprisingly, the closure of the Strait of Hormuz upended the generally organized patterns of the international oil trade. In a flash, the waterway through which about one-fifth of the world’s oil production passed was effectively shut down, stranding crude-laden supertankers in the Persian Gulf and shutting down oil and gas production in much of the war-torn region. The effects have been widespread. Dozens of refineries in Asia that depend heavily on crude from Iran, Saudi Arabia, Kuwait and other Persian Gulf producers were left to scramble for alternative sources of supply, including the U.S. Some refineries in Europe faced shortfalls too, if not as severe, and also sought out U.S. oil. In addition, large short‑term draws from storage (both commercial storage and the Strategic Petroleum Reserve, or SPR), driven by higher prices and strong overseas demand, have helped enable a temporary spike in U.S. crude exports, but this is unlikely to be sustainable over the long term.

U.S. crude exports will likely revert back to previous levels if trends over the last few years hold. U.S. crude output (sum of stacked layers and left axis in Figure 1 below) reached a record 13.6 MMb/d in 2025 and peaked at 13.9 MMb/d in October, according to monthly data from the Energy Information Administration (EIA). Despite that growth, the share of those barrels headed for export (purple line and right axis) held at about 30% as U.S. refiners appeared to be taking on most of the additional output, gradually increasing domestic crude runs (arrow and orange layer) as export volumes (teal layer) held mostly steady. So far in 2026, production has edged lower from late-2025 levels and RBN expects overall production volumes to remain mostly flat compared to last year, with Permian growth offset by modest declines elsewhere.