Crude exports from US Gulf coast ports are forecast to hit a new all-time high this quarter, according to Rystad Energy, in what would be a welcome boost for the tanker market.
They are forecast to reach 3.3m barrels per day (bpd) exceeding the previous record of 3.2m bpd in the first quarter 2020, before the Covid-19 pandemic took its toll on global markets.
More than 95% of all US crude exports transit through the Gulf ports of Corpus Christi, Houston, Beaumont, Port Arthur and Louisiana.
Rystad Energy attributed the increase to refining capacity outages which have limited operators’ ability to meet demand and the US government’s Strategic Petroleum Reserve (SPR) release boosts supply.
“The Biden Administration is exploring ways to rein in gasoline prices for US consumers and is reportedly considering a full or partial ban on crude exports, but many industry leaders and politicians argue such a move would not necessarily reduce prices and would hurt key allies,” the research company said.
“The government’s unprecedented support for the domestic crude system has accelerated US supply, with levels expected to hit 13m bpd this summer for the first time since November 2019.
“But the unintended consequence of federal intervention is that more barrels than ever before are being sold to international buyers,” Rystad Energy said.
The Port of Corpus Christi is a significant driver of the growth, with throughput increasing by more than 150,000 bpd to reach 1.86m bpd, up from a total 1.7m in the first quarter of 2022, far surpassing pre-Covid levels, according to Rystad Energy.
Port of Houston exports have also been rising since the third quarter of last year, but still fall short of their pre-pandemic levels.
Artem Abramov, head of shale research at Rystad Energy said: “Domestic refining capacity in the US remains depressed compared to pre-Covid levels, so it is no surprise that government intervention to support crude supplies has resulted in an increase in exports of domestically produced light barrels.
“It means the US is able to support global markets amid the most challenging energy crisis in at least 30 years,” he said.
Under Rystad Energy’s base case scenario, crude exports will approach 4m bpd in the first three months of 2023 and break the 4m bpd barrier by the second quarter of 2023, thanks to strong SPR draws and a rosy domestic supply outlook.
While a quicker expansion is not off the cards from the perspective of loading and port inbound flow capacity, Rystad said the growth outlook could be tempered by bottlenecks in the upstream and basin midstream side.
“The likelihood of soaring exports could be deemed unrealistic as there is little that the nationwide US supply chain can do to resolve existing labor and capacity challenges faster,” it said.
“However, should supply chain challenges alleviate even somewhat in the first half of 2023, exports could rise beyond current forecasts.”
