Record crude oil volumes exported from the U.S. will be heading to Asia in the next couple of months to take another piece of the market away from Russia and producers in the Organization of the Petroleum Exporting Countries (OPEC).
The U.S. is set to export 2.3 million barrels per day (MMbbl/d) in June, of which 1.3 MMbbl/d will head to Asia, estimated a senior executive with a key U.S. oil exporters.
Data from the Energy Information Administration shows U.S. oil exports peaked at 2.6 MMbbl/d two weeks ago.
The record outbound volumes come as U.S. crude production hit all-time highs, depressing U.S. prices to discounts of more than $9 a barrel below Brent crude futures on May 28, the widest in more than three years and opening an arbitrage for excess supplies to other markets.
The difference in the key benchmarks was a chance for Asian refiners to reduce light crude imports from the Middle East and Russia after Brent and Gulf prices touched multi-year highs, traders in Asia said.
"We're diversifying a lot to other regions. If Saudi Aramco still doesn't reduce prices next month and ADNOC (Abu Dhabi National Oil Company) follows, we will increase our U.S. crude purchases," a Southeast Asian oil buyer said.
In Asia, China—led by Sinopec, the region's largest refiner—is the biggest lifter of U.S. crude. The company, after cutting Saudi imports, has bought a record 16 MMbbl (533,000 bbl/d) of U.S. crude, to load in June, two sources with knowledge of the matter said.
India and South Korea are the next biggest buyers in Asia, each lifting 6 MMbbl to 7 MMbbl in June, sources tracking U.S. crude sales to Asia said. Indian Oil Corp bought 3 MMbbl earlier this month via a tender, while Reliance Industries purchased up to 8 million barrels, the sources said, although it wasn't clear if Reliance's cargoes would all load in June.
The sources declined to be named due to company policies.
South Korea's purchases are driven by its top refiners SK Energy and GS Caltex.
Taiwanese state refiner CPC Corp has also snapped up 7 MMbbl to be lifted in June and July.
U.S. exports to Thailand will increase to at least 2 MMbbl. State oil company PTT PCL is 1 MMbbl of WTI Midland, while Thai Oil and Esso Thailand bought at least 500,000 bbl of Bakken crude each, said traders with knowledge of the country's crude deals.
Reliance declined to comment. PTT, Thai Oil and Esso Thailand all did not respond to requests for comment.
But even if Asia and Europe are keen to take more U.S. crude, the record volumes are straining export infrastructure in the U.S., limiting its ability to pump and ship more oil.
"Tight (shale) oil's been eating OPEC's lunch for the last few years. The lack of infrastructure will temporarily cede market share back to OPEC," R.T. Dukes, head of U.S. Lower 48 oil supply at Wood Mackenzie said in a note last week.
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