ANALYSIS-How soaring US oil exports to China are transforming the global oil game
▻https://af.reuters.com/article/africaTech/idAFL8N1PV014
The transformation is reflected in figures released in recent days that shows the U.S. now produces more oil than top exporter Saudi Arabia and means the Americans are likely to take over the No.1 producer spot from Russia by the end of the year. C-OUT-T-EIA
The growth has surprised even the official U.S. Energy Information Administration, which this week raised its 2018 crude output forecast to 10.59 million bpd, up by 300,000 bpd from their last forecast just a week before.
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The U.S. supplies will help reduce China’s huge trade surplus with the U.S. and may help to counter allegations from U.S. President Donald Trump that Beijing is trading unfairly.
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The flood of U.S. oil may even change the way crude is priced.
Most OPEC producers sell crude under long-term contracts which are priced monthly, sometimes retro-actively. U.S. producers, by contrast, export on the basis of freight costs and price spreads between U.S. and other kinds of crude oil.
This has led to a surge in traded volumes of U.S. crude futures, known as West Texas Intermediate (WTI), leaving volumes of other futures like Brent or Dubai far behind.
“Buyers, like sellers of U.S. oil, started hedging WTI,” said John Driscoll, director of Singapore-based consultancy JTD Energy Services.
Despite all these challenges to the traditional oil order, established producers are putting on a brave face.
“We have no concern whatsoever about rising U.S. exports. Our reliability as a supplier is second to none, and we have the highest customer base with long-term sales agreements,” said Amin Nasser, president and chief executive officer of Saudi Aramco, Saudi Arabia’s state-owned oil behemoth.