Trump's Revenge: US Oil Floods Europe, Hurting OPEC and Russia



Trump's Revenge: US Oil Floods Europe, Hurting OPEC and Russia
U.S. oil is even edging out North Sea Forties, which is produced in the backyard of the continent's refineries.

Reuters

MOSCOW/LONDON, April 23 (Reuters) - As OPEC's efforts to balance the oil market bear fruit, U.S. producers are reaping the benefits - and flooding Europe with a record amount of crude.

Russia paired with the Organization of the Petroleum Exporting Countries last year in cutting oil output jointly by 1.8 million barrels per day (bpd), a deal they say has largely rebalanced the market and one that has helped elevate benchmark Brent prices close to four-year highs.

Now, the relatively high prices brought about by that pact, coupled with surging U.S. output, are making it harder to sell Russian, Nigerian and other oil grades in Europe, traders said.

"U.S. oil is on offer everywhere," said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing U.S. oil. "It puts local grades under a lot of pressure."

U.S. oil output is expected to hit 10.7 million bpd this year, rivalling that of top producers Russia and Saudi Arabia.

In April, U.S. supplies to Europe are set to reach an all-time high of roughly 550,000 bpd (around 2.2 million tonnes), according to the Thomson Reuters Eikon trade flows monitor.

In January-April, U.S. supplies jumped four-fold year-on-year to 6.8 million tonnes, or 68 large Aframax tankers, according to the same data.

Trade sources said U.S. flows to Europe would keep rising, with U.S. barrels increasingly finding homes in foreign refineries, often at the expense of oil from OPEC or Russia.

In 2017, Europe took roughly 7 percent of U.S. crude exports, Reuters data showed, but the proportion has already risen to roughly 12 percent this year.

Top destinations include Britain, Italy and the Netherlands, with traders pointing to large imports by BP, Exxon Mobil and Valero.

Polish refiners PKN Orlen and Grupa Lotos and Norway's Statoil are sampling U.S. grades, while other new buyers are likely, David Wech of Vienna-based JBC Energy consultancy said.

"There are a number of customers who still may test U.S. crude oil," Wech said.

The gains for U.S. suppliers could come as a welcome development for U.S. President Donald Trump, who accused OPEC on Friday of "artificially" boosting oil prices.

"Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea. Oil prices are artificially Very High! No good and will not be accepted!" Trump wrote on Twitter.


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WHAT DO YOU THINK?


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John  |  April 28, 2018
Cale, it's not the same oil. Canadian oil sands crude is heavy and replaces Caribbean, central American and heavy Persian Gulf crude imports. US crude oil shipped to Europe is light and very light/condensate. Countries import the types of crude oil that their refineries are set up to process.
Pirthpall Sekhon  |  April 28, 2018
Trump is providing leadership and generating long overdue optimism. Obama did it quietly. Trump follows ancient Chinese logic - win without fighting. Scare the he'll out of them. Offcourse Obama started quietly using shale oil muscle but the groundwork was laid by previous administrations. Make hay when the Sun shines. It's not a resource which will be in huge demand for ever.
Andrew  |  April 27, 2018
Trump has nothing to do with this. The supply demand curve is being repaired and the market is functioning well. Trump is just another Twitter blogger who is trying to barge his way to the front to make people believe he's some say in the oil industry. He hasn't.
What?  |  April 27, 2018
This has nothing to do with Trump, exports legislation started during the Obama administration.
Cale  |  April 27, 2018
Where does the US gets all this oil? I understood that the US is importing Canadian sand oil at a ridiculous cheap price. Is it now reselling this on the market?