U.S. Oil Exports Fall to Lowest Level in Eight Months

• U.S. oil exports fell to 3.66 million barrels per day (bpd) in July, the lowest level in eight months, as a short-lived peace deal between the U.S. and Iran in June briefly flooded markets with Middle Eastern oil and diminished demand for American crude abroad. Earlier this year, U.S. exports surged to a record 5.7 million bpd in May after the war in Iran disrupted Middle Eastern supplies.
• The June memorandum of understanding between Washington and Tehran briefly allowed stuck tankers to navigate through the Strait of Hormuz, increasing oil supply to global markets. During the peace deal period, the number of tankers exiting the Strait peaked at 42 per day, contributing to a steady decline in U.S. exports.
• The share of U.S. crude exports to Asia fell to 40% in July from 52% in June, as major buyers reduced purchases. Exports to Japan, the largest buyer in June and July, declined 67% to 324,000 bpd, while shipments to South Korea fell 39% to 474,000 bpd. Exports to Europe also declined to 1.7 million bpd, down from 2.5 million bpd in May.
• High refinery utilisation in the U.S. also kept barrels away from export markets. The four-week average refinery utilisation reached 96.3%, the highest since 2018, while crude oil inputs to refineries rose to their highest level in about seven years.
• Analysts expect exports to recover in August and September as the discount of WTI to Brent widened again, improving the competitiveness of U.S. crude. Export volumes are expected to exceed 4 million bpd, although they are unlikely to return to the record levels seen in April and May.
• The sharp decline in U.S. exports highlights how quickly global crude trade flows can shift as Middle Eastern supplies recover. However, analysts noted that U.S. exports could increase again if the conflict in the Middle East escalates, with the U.S. retaining export capacity of about 6 million bpd.

(Source: Reuters)