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US seaborne exports of crude oil will not surpass 3 million b/d
in October, as preliminary data by IHS Markit Commodities at Sea
has shown. This level was almost reached last month, just like
June, but activity during the first three weeks of October suggests
that shipments will only marginally exceed 2.5 million b/d this
month. Shipments on Aframaxes and VLCCs have been pushed down
month-on-month, most probably as a result of the increased cost of
shipping after the US sanctions on the COSCO fleet, while Suezmax
loadings have managed to further expand.
China seems to be still importing crude oil from the US, but
shipments have been kept minimal due to the tariff blocking easier
access to supplies. Shipments from the US to China haven't
surpassed 150,000 b/d since August 2019, with nothing loaded during
the last couple of weeks heading to the world's biggest importer.
From September 1st, Beijing announced a 5% levy on US crude. As
long as supply remains oversupplied, traders are left with several
other alternative barrels to tap into. South Korea and Taiwan
remain the major importers of US crude oil barrels in the Far East,
with the region's market share standing above 25% since January
2019.
Meanwhile, flows from the US to Northwest Europe have remained
strong, with the entire continent having absorbed a third of US
shipments so far in 2019. Volumes were pushed much higher since
late August, having approached one million b/d both in September
and this month so far, primarily due to demand for US grades in the
UK. Meanwhile, flows from Europe to the US have a market share of
just 8%, very similar to what Russia alone and West Africa have
been supplying to the US since the beginning of 2019.
Saudi Arabia remains the top crude supplier to the US, with the
market share of the entire Middle East Gulf region standing at 27%
so far in 2019. Other suppliers across the Americas, primarily
Canada, Mexico, Brazil, Ecuador and Colombia have been
strengthening, with their share standing above 40% so far this
year.
Focusing on crude oil exports from the US, the rise in volumes
since last year has been very clear, with the country set to turn
into a net exporter by early next year. Some US grades have been
popular, with global demand for sweet (lower sulphur) crude oil
produced from the Permian Basin in the US across a wide range of
importers to continue driving this trend. Refineries demanding
sweeter crude oils to produce low sulphur marine fuels as we
approach IMO 2020 are interested in US barrels. Moreover, as most
US refineries are built to primarily process medium and heavy sour
crude oil barrels, exporting domestically produced crude oil is the
only option for the US. That's why we don't expect imports to drop
much from now on.
Posted 31 October 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
Join our webinar on 10 Aug when our senior Economist will discuss the short-term prospects and long-term trends tha… https://t.co/uuN0ol321q
Aug 03
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