US crude oil exports surge to record high as tankers arrive on Gulf Coast

The Port of Corpus Christi has never been busier since tankers from around the world came to the U.S. Gulf Coast to load crude oil during the Iran War.

Before the war the Texas port was the world’s third-largest oil export terminal, after Ras Tanura in Saudi Arabia and Basra in Iraq.

Its importance has grown since then, as US crude oil exports have reached record levels and Iran’s blockade of the Strait of Hormuz has left the Persian Gulf’s two major ports largely cut off from the world.

US oil exports rose to 5.2 million barrels per day (bpd) in April, up 30% from the 3.9 million bpd exported in February before the war, according to Kpler data.

CEO Kent Britton said March was the busiest month in the history of the Port of Corpus Christi and the first quarter was the busiest quarter ever. Britton said oil exports have increased to about 2.5 million barrels per day since the war began, compared with 2.2 million bpd last year.

The CEO said ship traffic in Corpus Christi increased to more than 240 ships in March, while the port typically sees 200 ships a month.

“It’s a constant flow of tankers coming and going,” he said.

Asian buyer

Corpus Christi accounted for nearly half of U.S. crude oil exports in April, while Houston accounted for most of the rest, according to Kpler data.

Kpler data shows that about 50 to 60 large tankers, called very large crude carriers (VLCCs), are headed to U.S. ports on any given day now, double the amount seen last year. VLCCs can typically carry up to 2 million barrels.

Many of those tankers are coming from Asian countries that imported their oil from the Middle East before the war, said Matt Smith, director of commodity research at Kpler. They are now turning to the US Gulf Coast as the trade route to the Persian Gulf through the strait is effectively closed.

“Asian markets are buying whatever they can get their hands on, so they’re taking a lot of light sweet crude,” Smith said.

Corpus Christi has also seen large growth in refined product exports to the Middle East. CEO Britton said export volumes to the region were higher in the first quarter than last year.

export limit

Rerouting ships to the American Gulf Coast was probably a better solution to the wartime crisis than permanently incorporating Asian buyers into the United States.

Smith at Kpler said light sweet crude oil produced by the U.S. is a poor substitute for sour Middle East barrels because of the way many refineries are configured to optimize the heavier feedstock.

What’s more, US oil exports are probably limited to just above 5 million bpd due to dock capacity, Smith said. CEO Britton said Corpus Christi’s export capacity is limited to a maximum of 2.6 million bpd due to pipeline constraints, but perhaps it could handle 500,000 bpd if pipelines were expanded.

The US, Latin America and West Africa could help supply incremental barrels to needy Asian buyers. But the Middle East is too big an oil producer to be replaced, Smith said. Before the war about 20% of the global oil supply was exported through the strait.

“This is a hole that can’t be closed,” Smith said. “The North must ensure secure supplies from the Middle East.”