US Crude Exports Dip despite the End of the Crude Oil Export Ban
What's Driving the Crude Tanker Industry in 2016?
Crude export ban
After four decades, the US crude oil export ban from 1975 was lifted in December 2015. In this article, we’ll take a look at how crude exports have changed after the end of the ban and what it means for the crude tanker industry.
Cargo going out of the US
In January 2016, the first crude export cargo was loaded in Houston and discharged in France. After that, more cargo headed towards Europe, and a Japanese oil company bought 300,000 barrels of crude oil, which was transported on a Suezmax. Plus, in the last week of March, the first US crude oil cargo passed through the Panama Canal heading towards Nicaragua’s West Coast.
US crude exports
Since the end of the ban, US crude oil exports have fallen, but this is mainly due to decreased exports to Canada. As US oil (USO) became available to the world, the WTI discount disappeared, which made foreign crude oil more competitive for Canadian refineries. The US exports oil to Canada through pipelines or rails and this decline doesn’t negatively weigh on crude tankers. Plus, US exports to other countries are increasing.
Infrastructure issues
Most of US ports are not equipped to handle large vessels. Due to this, only smaller vessels like Aframax and Suezmax can enter US ports. Thus, it’s likely that only smaller tankers will benefit from the lifting of the US export ban in the short term.
Teekay Tankers (TNK) and Tsakos Energy Navigation (TNP) operate Aframax vessels. Nordic American Tanker (NAT) operates only Suezmax vessels while Euronav (EURN) and DHT Holdings (DHT) mostly have VLCCs (very large crude carriers) in their fleet.
Iran’s ban on exporting oil was also lifted recently. In the next article, we’ll see how Iran’s exports have changed and what difficulties the country is facing with its exports.
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