The United States, the world's largest crude producer, is
facing increasing competition as the Organization of the Petroleum Exporting
Countries and its allies pump more oil in a bid to regain market share and
punish members that over-produce.
Since
April, OPEC Plus countries including Saudi Arabia and Russia have made or
announced increases totaling 1.37 million barrels per day, or 62% of the
2.2 million bpd they aim to add back to the market.
The additional supplies come at a time of broad uncertainty
for global oil producers as they assess how volatile trade policies are
impacting the world's economic outlook and prepare for a longer-term future in
which greener fuels could displace their barrels.
For the
US, lower demand for a significant portion of its crude will likely add to a
complicated outlook for producers already digesting on-again, off-again tariffs
from President Donald Trump's administration. Companies are considering
cutting output and jobs even as Trump urges higher domestic production.
US exports fell to an average of 3.8 million bpd in May from
an average of 4 million bpd in April, according to an analysis of weekly Energy
Information Administration data.
Prices have declined for crudes such as WTI-Midland, a key
sweet grade from the US shale region. Since early March, its price is off by
45% to a 60-cent premium to US crude futures.
Light Louisiana Sweet from the US Gulf Coast has fallen by
about 30% to a US$2.70 per barrel premium over the same period.
"That's
a part of OPEC accelerating. Light sweets are weak, broadly speaking,"
said Jeremy Irwin, global crude lead at Energy Aspects, adding that demand is
expected to fall further as European refiners favor medium crudes in the summer
months.
The US sent 1.4 million bpd of light, sweet crude to Europe
in May, versus 1.6 million bpd in April, data from Kpler showed.
In May 2024, the US had exported 1.7 million bpd of light,
sweet crude to Europe, which is lighter in density and lower in sulfur content.
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