The US will quadruple its crude oil exports to volumes greater than those of most Opec members within three years, an influential consultant has forecast, as Texas producers seek customers for seemingly unstoppable supplies.
By 2020, exports of US crude would reach 2.25m barrels a day, according to PIRA Energy. By comparison, last year Kuwait exported 2.1m b/d, Nigeria 1.7m b/d and the US itself 520,000 b/d.
The forecast suggests that the Opec exporters’ cartel faces a drawn-out struggle as it tries to raise crude prices by curtailing output in the face of a prolific US shale oil industry, which has roared back to life in 2017 as prices have recovered and averaged near $50 a barrel.
US crude production is likely to hit 9.3m b/d this year, up from 8.9m b/d in 2016, and will rise to 9.9m b/d in 2018, the US Energy Information Administration estimated on Tuesday.
“The US will become one of the top 10 exporters in the world,” said Gary Ross, PIRA’s global head of oil. “They’re not a member of Opec, and they’re not about to control production in an effort to keep prices up. This is very bad news for Opec.”
The US prohibited most exports of crude oil until late 2015, when Barack Obama signed legislation overturning the 40-year-old ban. Since then, American barrels have been flowing to new markets such as Europe and China. The Trump administration has embraced the trend as it pursues a vision of “energy dominance”.
Most exports have been leaving on vessels from the Gulf of Mexico. The leading port is Corpus Christi, Texas, where the first Very Large Crude Carrier-type supertanker made a trial visit in May.
Occidental Petroleum, the biggest operator in the Permian Basin of Texas, last year opened an export terminal at Corpus Christi. Trafigura, a commodities trading house, recently signed a long-term contract to receive Permian crude for export through Corpus Christi.
“We’re seeing tremendous increases in crude exports,” said John LaRue, the port’s executive director, as he awaited a flight to Washington to advocate for federal funding to deepen his channel. “We will be well more than a million barrels a day before too long, from almost zero.”
PIRA, founded by Mr Ross in the 1970s and now a unit of S&P Global Platts, is widely followed by energy executives and hedge funds. Other analysts have more modest targets: IHS Markit sees US crude oil exports reaching 1.4m b/d by 2020, while the most bullish scenario from the US EIA does not envisage exports surpassing 2m b/d for a quarter of a century.
The US still depends on imports of crude oil; it bought 7.9m b/d last year. The type of high-quality, “sweet” crude flowing from fields in Texas and North Dakota has a limited appetite from US refineries configured to run heavier grades of oil.
The mismatch favours exports of some domestic oil and continued imports from countries such as Canada and Saudi Arabia.
“You could still see substantial imports of heavy, sour barrels into the US,” Mr Ross said.
PIRA’s forecast, published in a report this week, said 22 oil terminals at ports in Texas and Louisiana collectively have capacity to export 2.7m b/d. Another 600,000b/d in export capacity is likely to be added by the end of 2018, PIRA said.
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