The global crude export landscape continues to shift as the US Lower 48 pumps more light sweet crude into the market. With little forecast incremental demand for these volumes domestically, US producers will look first to Europe and then Asia to absorb this excess production.
Since its crude export ban was lifted in 2015, the US – for the first time in a century – is becoming a major player in global crude markets. The shift to shipping crude out of the US, rather than only bringing it in, has global implications, especially as onshore production surges.
Domestic US refineries: overflowing with US crude
Over the next five years, we expect to see an additional 4 million barrels per day (b/d) of US crude enter the market – potentially positioning the US as the world's largest crude producer. But the majority of this production will be light sweet and ultra light crudes, as well as condensates. US refiners tend to prefer medium and heavy crudes and have a minimal capacity to modify their configurations, and this means only modest consumption of these lighter crudes domestically. We estimate that only about 900 kb/d will be absorbed into the domestic market, leaving the rest for export.