US crude exports overtakes products exports

Dec 15 2017

Since the US lifted its ban on crude oil exports in December, 2015, in September and October, this year, increased demand from Asia and Europe caused US seaborne crude oil exports to surpass the export of oil products in terms of bill tonne/miles.

This is due to US crude oil being shipped twice the distance of products, BIMCO said in a recent report. In October, seaborne crude oil exports amounted to 46 bill tonne/miles, whereas US products exports was equivalent to 43 bill tonne/miles.


Despite crude oil exports being half the amount of product exports in October, 2017 (in terms of volume) it is now more important to the tanker sector. This is due to the average sailing distance per exported tonne of crude oil being more than double the distance of the exported oil products.


BIMCO’s chief shipping analyst, Peter Sand, commented: “The increased US crude oil exports during 2017 benefits the crude oil tanker shipping industry. The demand on that trade is up by 151%, compared to last year. Not only are the volumes more than doubling, the sailing distances are also increasing as well.


“US crude oil exports are now more important to shipping than US oil product exports. Asia and Europe are the importers demanding most US crude oil in 2017. With Asia in particular being responsible for the longer sailing distances,” Sand explained.


For the first 10 months of 2017, the US crude oil exports by sea increased 151%, compared to the same period last year. This amounts to an additional 20 mill tonnes of crude oil being available to the shipping market, equivalent to an extra 7.5 VLCC cargoes being exported per month, compared to 2016.


While the average distance per exported tonne of US crude oil for the first 10 months of 2016 was 4,277 nautical miles, for the same period this year, the distance was 7,090 nautical miles.


In October alone, Europe took an amount of crude oil similar to the amount imported in each of the previous quarters of 2017. The average sailing distance dropped slightly from 3Q17, but still remained above 7,000 nautical miles.


In terms of volume, the three largest importers of US seaborne crude oil this year were China, Canada and the UK. China is by far the main player, importing 25% of total exports, while Canada imported 15% and the UK 9%.


Despite Canada being one of the largest importers in terms of volumes, this generates low  tonne/miles, due to the close geographical proximity to the US.


BIMCO’s recent report covering Chinese oil imports showed that the Middle Eastern countries share of Chinese crude oil import declined three years in a row. China imported 55% from the Middle East in 2015, whilst importing 45% during the first 10 months of 2017. Countries, such as the US, Angola, Brazil, Venezuela, Russia and UK all experienced rising Chinese imports.


“China is diversifying their crude oil supplier portfolio by shifting away from being too dependent on Middle Eastern crude oil. China sourcing more crude oil from the US instead of the Middle East benefits the crude oil tanker industry with longer distances.


“As 97% of all seaborne US crude oil is exported from the US Gulf, the sailing distance to China is double the distance of Middle Eastern exports to China and thereby tonnage is tied up for longer periods, benefiting crude oil tanker demand,” Sand explained.


Texas based ports’ market share of exports has surged. Some 79% of all US crude exported via sea was loaded in Texas during the first 10 months of 2017, up from 69% for the same period in 2016. In terms of volume, the Texas loading area has ramped up its export of crude oil by 186% for the first 10 months of 2017, compared to the same period in 2016. This amounts to an additional export of 17.3 mill tonnes, 85% of the total increase in US seaborne crude oil exports.


The most influential ports are Corpus Christi, Beaumont, Houston and Gramercy, exporting 33%, 21%, 15% and 14% of US crude oil, respectively. The four ports accounted for 83% of the total US seaborne crude exports. Since 2016, when Corpus Christi exported 24% of US seaborne crude oil, the port has developed into by far the largest crude oil export port in the US.


The port will have VLCC loading terminals by the end of 2018. Therefore, crude oil destined for China will travel 15,000 nautical miles instead of 10,000. This will bring considerable extra tonne/miles to the crude tanker shipping industry, BIMCO concluded.


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