European and African Oil Prices Fall as U.S. Exports Soar

U.S. crude oil exports are rebounding this month, dragging down the prices of physical crude grades in Europe and Africa amid a relatively tepid market, traders told Bloomberg on Friday.

After a temporary dip in April, U.S. crude flows to Europe have rebounded so far in May, according to vessel-tracking data that Bloomberg has compiled.

In the first three weeks of May, observed U.S. crude oil exports to Europe are estimated to be on the rebound and to average at least 2.1 million barrels per day (bpd), up by a third compared to the average shipments in April, the data showed.

Higher exports are also driven by a decline in the price of the WTI Midland grade from the United States. The differentials of WTI Midland have fallen to the lowest levels in more than a year. 

WTI Midland was added to the Brent basket in June 2023 and has been a major driver of the surging U.S. crude oil exports over the past year, especially to Europe.  

The WTI crude oil included in determining the Dated Brent price is delivered into Rotterdam, a large crude oil storage and trading hub in the Netherlands. As a result, the Netherlands received more U.S. crude oil exports than any other country in 2023, averaging 652,000 bpd, per EIA estimates.

In total, U.S. crude oil exports to Europe averaged 1.8 million bpd last year, slightly more than U.S. exports to Asia and Oceania of 1.7 million bpd. American crude has replaced a large portion of Russian crude, which Europe imported before 2022.

As U.S. oil output rose by 9% on the year to a record-high 12.9 million bpd in 2023, and as many American refineries are designed to use heavier and sour crude, the excess light sweet crude from the shale plays found more buyers abroad.   

By Tsvetana Paraskova for Oilprice.com

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