US crude oil exports will peak in 2024

U.S. crude oil exports are set to grow by the narrowest margin this year after a decade of rapid growth.

Crude exports from US ports have averaged 4.2 million bpd so far this year, up just 3.5% y/y from a robust level. 13.5% growth in 2023. This year’s rate of growth is the lowest since 2015, when the country lifted a 40-year federal ban on domestic crude exports.

“U.S. crude oil exports are flat due to a combination of slowing supply growth and reduced demand — particularly from Asia this year,” says Matt Smith, an analyst at energy data firm Kpler he told Reuters.

U.S. crude exports to Europe fell 1 percent as buyers preferred cheaper regional and West African oil. Interestingly, Nigeria’s Dangote refinery has been the only major new market for US crude since the start of this year.

“Dangote is an outlier when it comes to new refining capacity because it operates predominantly on light sweet crude – from Nigeria or the US,” said Smith Kpler. “New refining capacity is being built predominantly in OPEC+ countries or Asia, two regions where light and medium sour barrels are more prevalent,Smith added.

Meanwhile, U.S. oil production is set to rise just 2.3 percent this year as shale producers maintain production discipline and return capital to shareholders. High decline rates for shale wells typically set in soon after start-up, meaning additional well completions are required to offset drawdowns from existing wells if production is to be maintained. Unfortunately, StanChart reported that the number of horizontal rigs began to decline sharply in early 2023 and is currently 20% below its post-pandemic peak, after falling for the past six months. Analysts point out that while the completion of previously drilled wells and technical changes provide some compensation, a significant decline in activity more often than not leads to a delayed decline in growth.

By Alex Kimani for Oilprice.com

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