The United States is on course to becoming a net crude oil exporter soon, according to oil market experts. The US had already become a net exporter of petroleum products in 2020, marking a historic moment. When the US becomes a net crude exporter, it will also set off huge changes in the middle-eastern power play, according to energy and forex expert Simon Watkins.
Difference Between Net Crude Exports and Net Petroleum Exports
There is a distinction between being a net crude oil exporter and a net petroleum products exporter. The US becoming a net crude exporter was unthinkable a few years ago, but energy experts think it will happen as early as this year.
According to US government data released in November last year, the country, which has long been known only as the biggest energy consumer in the world, imported only 1.1 million barrels per day of crude oil. Projections based on this lowest ever US net crude import figure showed that the country could actually become a net crude exporter within months.
Here's How it Works
According to the Energy Information Agency (EIA), the United States' net crude oil imports are declining. US government data for November 2022 showed that the US net import of crude oil was just 1.1 million bpd. The import decline happens even as domestic crude production is set to edge up this year to around 13 million barrels per day. According to the EIA's projections, the US crude oil production will average at least 12.44 million bpd this year.
This is a huge jump from the average crude oil production of 11 million barrels per day recorded in 2011. The US achieved average crude output of 12 million bpd in 2022. Even as the average output touches 12.44 million bpd in 2023, it is also projected that output growth will far outstrip the yearly increase in demand.
US Was net Crude Exporter Until 1945
In other words, while US consumes a little more than 20 million bpd of oil day, it also exported 3.4 million barrels per day (bpd) of crude (the peak figure in 2022) and 3 million bpd of refined petroleum products like gasoline and diesel fuel. If these export figures are sustained through the next year, and if the projected crude output rise does indeed happen due to an acceleration of shale oil pumping, the US will become a net crude exporter for the first time since 1945.
Shift in Global Power Dynamics
This will mark a remarkable shift in the global power dynamics and Washington's Middle East strategy. There is a difference between being a net crude exporter and a net petroleum exporter. The US had already become a net oil exporter, when its sale of refined petroleum products is taken into account.
"Basically, 'crude oil' is just crude oil, but petroleum includes crude oil, refined petroleum products, and other liquids (including gas condensates)," explains Watkins.
"This technical but important distinction aside, it is not beyond the realm of possibility that 2023 may see the U.S. finally become a net exporter of crude oil for the first time since 1945 and the ramifications of this for its policy towards the Middle East could be huge," says Watkins.
2021 Numbers Indicate Incoming Change
For more perspective, in 2021, the US imported about 8.47 million barrels per day of petroleum while it exported about 8.54 million barrels per day of petroleum, according to the US Energy Information Administration. While crude oil imports were 6.11 million barrels per day, crude oil exports were 2.96 million barrels er day.
It is important for the US domestic drillers to pump more oil to achieve the net crude exporter status. In March last year, close on the heels of the Russian invasion of Ukraine and the resultant oil market upheaval, the US Energy Secretary called for a sustained increase in US oil pumping. . Energy Secretary Jennifer Granholm also said that Biden's administration was taking steps to make sure there is 'significant increase' in domestic energy supply by the end of the year.