US crude gains significance in global oil markets

In early 2021 and throughout 2020, U.S. crude oil exports remained robust despite a collapse in global crude oil demand due to the COVID-19 pandemic. Since the U.S. first permitted exports outside of North America in 2016, volumes have grown significantly. This has placed the U.S. firmly on the map in terms of the big global crude suppliers. During the first 11 months of 2020, total U.S. crude oil exports reached 3.15 million barrels per day compared to 2.9 million barrels per day over the same period 12-months earlier, based on the latest data U.S. Energy Information Administration (EIA) data. Asia and European markets were the largest recipients of these exports. According to the EIA, total exports of U.S crude to Europe were about 1.1 million barrels per day over the January to November 2020 period, up over 20% from the same period 12-months earlier. The latest export volumes account for about 8% of total European refining capacity. Over the same period, total volumes of the constituent North Sea crudes (Brent, Forties, Oseberg, Ekofisk and Troll or BFOET) that underpin the Dated Brent benchmark fell around 6%.

This article looks at the role of U.S. oil and the impact that this is having on the European market and examines the likely direction of WTI as a global benchmark.