US Drilled 11.9 Million Barrels Last Year
After the Russia-Ukraine war, as European Union (EU) countries reduced their imports of Russian crude oil, there has been a reflected increase in U.S. crude oil exports to Europe. This is analyzed as the Russia-Ukraine war further strengthening the United States' position as an oil-producing country.
On the 26th (local time), the Wall Street Journal (WSJ), citing data from energy market research firm Kaypler, reported that the number of shipments transported from the U.S. to the European continent increased by 38% compared to the previous year during the one year since Russia invaded Ukraine last February.
The increase in cargo shipments by sea is attributed to the rise in shipments of West Texas Intermediate (WTI) crude oil to Germany, France, and Italy. In particular, Spain's imports of U.S. crude oil increased by 88% compared to the previous year after the war. In response to the increased demand, U.S. crude oil production also reached an all-time high. Last year, the crude oil drilled in the U.S. averaged 11.9 million barrels per day.
On the other hand, as of last month, the amount of crude oil transported from the Persian Gulf in the Middle East to Europe was estimated to be only 1.53 million barrels per day. WSJ explained, "In recent months, more U.S. crude oil has been transported to the European continent compared to Middle Eastern crude oil in Asia."
The increase in Europe's WTI imports was influenced by the rise in transportation costs for Brent crude oil due to the Russia-Ukraine war. Before the war broke out, when including transportation costs, WTI was only $3 to $4 cheaper than Brent crude oil. However, due to disruptions in maritime shipping caused by the war, when transportation costs are included, the cost gap between the two crude oil imports widened to as much as $10, WSJ explained.
Attention is focused on whether U.S. oil companies, which have been reluctant to increase production, will accelerate WTI production. The U.S. has been hesitant to increase crude oil production despite being an oil-producing country due to high production costs. U.S. shale oil is drilled using hydraulic fracturing, which requires large amounts of water and sand during production. Therefore, if crude oil prices fall below $40 to $50 per barrel, it is not profitable.
WSJ forecasted, "The widening price gap between WTI and Brent crude oil has made WTI exports a profitable trade for crude oil traders," adding, "The increase in crude oil exports will be a significant milestone that greatly influences the revitalization of U.S. oil production."
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