en.Wedoany.com Reported - U.S. crude oil exports rose to a record 5.6 million barrels per day (bpd) in May, as the Middle East crisis drove increased demand for American oil from Asian and European refiners. The war between the U.S. and Israel against Iran triggered the biggest disruption in global energy markets ever, prompting refiners worldwide to scramble for alternatives to Middle East supplies. About one-fifth of the world's oil and gas supply passes through the Strait of Hormuz, a key waterway that was effectively closed when the war broke out in late February.
According to data from analytics firm Kpler, U.S. crude exports surged last month above the previous record of 5.2 million bpd set in April, as the U.S. benchmark West Texas Intermediate (WTI) crude posted a steep discount to the global benchmark Brent crude. U.S. physical crude grades are typically priced based on their spread to WTI, and the wide discount to Brent made it more economical for foreign buyers to purchase and ship U.S. oil. In March, WTI's discount to Brent futures reached as high as $20.69 per barrel, the widest in 13 years, as Brent outpaced WTI gains due to the Middle East supply disruption. In April, when most trades for May-loading crude were executed, the spread averaged a discount of about $8.86, compared with a pre-war average of $4.85.
Exports to Europe and Asia hit record highs in May, with Asia absorbing 2.45 million bpd of the export barrels, maintaining its position as the top buyer for the second consecutive month. Europe followed closely at 2.4 million bpd. Japan, which typically imports most of its crude from the Middle East, accounted for the largest share of Asian imports of U.S. crude grades in May, at 808,000 bpd, up 32% month-on-month and a record high. "Given the volume of barrels lost from the Middle East Gulf, it's not surprising to see Asia absorbing so much," said Matt Smith, director of commodity research at Kpler.
U.S. crude shipments to the Mediterranean and Black Sea also hit a record high in May, with Bulgaria, Croatia, Turkey, and Greece becoming rare transatlantic buyers. Italy's record imports of 335,000 bpd drove the rise in European demand. "We believe Asian buying was primarily necessity-driven, while European buying was mainly due to favorable shipping economics and lower transatlantic freight rates," said Rohit Rathod, senior oil market analyst at Vortexa. At least 283,000 bpd (about 5%) of U.S. crude exports in May came from the U.S. Strategic Petroleum Reserve, part of the 172 million barrels released from emergency stockpiles to combat surging crude prices, flowing to European and Asian buyers.
After the strong exports in May, June exports are expected to slow, as hopes for a peace agreement eased some supply concerns and narrowed WTI's discount to Brent. Although WTI's discount to Brent remained relatively wide in early May, it narrowed in the second half of the month, trading around a discount of about $6 on Monday. Consulting firm Energy Aspects estimates June exports at about 4.9 million bpd and July at about 4.6 million bpd. "We expect June exports to fall by more than 1 million bpd from May," said Georgios Sakellariou, chartering analyst at Signal Maritime, adding that the company has identified at least 10 fewer Very Large Crude Carriers (VLCCs) for June dates compared with May. Sources and analysts said low U.S. WTI crude inventories would also push more barrels into domestic storage, thereby reducing exports. Prices for key U.S. export grades—WTI Midland from East Houston and Mars sour crude—weakened as demand slipped heading into July trading. MEH's premium to WTI stood at $1.15, compared with a premium of up to $7.75 for April-loading barrels. Mars crude's premium was $1.50, down from a high of $17.50 in April.
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