U.S. crude oil exports to Europe hit a record high in March, due to a wide WTI to Brent discount in January which prompted many spot deals for the cheaper U.S. crude, analysts and tanker-tracking firms told Reuters this week.
The U.S. has shipped so far in March a record 2.1 million barrels per day (bpd) on average of crude oil to Europe, according to estimates cited by Reuters.
In January, the discount of the U.S. benchmark, WTI Crude, to the international benchmark, Brent, widened to over $7 per barrel at the end of the month, as U.S. refineries processed lower volumes of crude after the Winter Storm Elliott at the end of December shut refineries on the U.S. Gulf Coast for several days. At the end of December 2022, as much as 1.5 million bpd of the U.S. Gulf Coast’s refining capacity was shut down due to the freezing temperatures.
Refineries run by Motiva Enterprises, Marathon Petroleum, and TotalEnergies outside Houston were shut. Operations at other refineries in Texas, run by ExxonMobil, Valero Energy, and LyondellBasell, were also disrupted by the severe winter storm.
As a result, demand for crude from U.S. refiners was lower in January, when the cargoes arriving in Europe in March were likely contracted. Many refiners have also said they would enter longer periods of scheduled maintenance, further reducing domestic U.S. crude demand.
“Oil majors and independent refiners alike have warned of a heavy US maintenance period to start the year. For many refiners, H1 2023 is a chance to catch-up on much needed regular maintenance as numerous refiners deferred larger maintenance projects in recent years amidst the pandemic and record margins,” Wood Mackenzie said in a recent report.
Some U.S. grades have seen their prices go up, due to the higher export demand. For example, the price of WTI Midland has jumped by almost 50% so far in 2023 compared to Q4 2022, while the price of WTI at East Houston has increased by around 30%, according to Reuters estimates.