The United States has become a large net exporter of petroleum in response to Russia’s invasion of Ukraine and the subsequent disruption of Russia’s oil exports, helping relieve shortages in Europe and Asia.
While the country has emerged as the supplier of last resort, that is not a role it can shoulder alone for every long without sharply higher prices ().
U.S. product exports have accelerated to a record in recent weeks while crude imports have decelerated to the slowest rate for decades, according to data from the U.S. Energy Information Administration (EIA).
The United States became a net exporter of almost 3 million barrels per day in mid-April, a sharp turn around from net imports of more than 1 million bpd in the weeks before the invasion.
U.S. production and inventories have replaced shipments of crude, residual fuel oil and distillate fuel oil lost as a result of sanctions and customers avoiding Russian petroleum for reputational reasons.
The result is that inventories have continued to deplete with stocks of crude and products including the strategic petroleum reserve at the lowest level since 2008.
U.S. inventories have declined in 70 of the last 95 weeks by a total of 421 million barrels since July 2020, more than reversing the 225 million barrel increase during the first wave of the pandemic and lockdowns.
In an indication how tight stocks have become, crude inventories around the NYMEX futures delivery point at Cushing, Oklahoma have fallen to the lowest level since 2014 and before that 2008.
Across the country, commercial stocks of crude are 64 million barrels below the pre-pandemic five-year average, stocks of distillates are 30 million barrels below average, and there is smaller deficit in gasoline of 4 million barrels.
The United States cannot continue indefinitely to cover the whole shortfall in Russian oil production and exports without shortages emerging domestically and driving prices higher.
Reflecting the strain, the United States has banned oil imports from Russia but urged Europe to be cautious about implementing a complete embargo.
On April 21, U.S. Treasury Secretary Janet Yellen warned of the counterproductive impact if a European import ban on Russian created a global oil shortage and forced prices up everywhere.
John Kemp is a Reuters market analyst. The views expressed are his own.