Analysis: EIA Sees Product Exports Surge to 3-Mo High


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- U.S. refined product exports last week clocked in at the 
fastest pace since mid-December, Energy Information Administration data (EIA) 
shows. In the wake of the largest oil supply disruption in history leading 
refiners across Asia to curb production and halt exports, demand for U.S. 
refined products may pick up further in weeks to come.

   The EIA data on weekly U.S. petroleum exports came Wednesday (3/25) amid 
tightening global supply. Refiners east of the Suez Canal have been forced to 
throttle production after the de-facto closure of the Strait of Hormuz shut in 
10 to 15 million bpd of crude oil. 

   China, a main fuel exporter in East Asia, was among the countries halting 
exports at the beginning of March to ensure domestic demand could be met. Fuel 
prices in the region, especially that of jet fuel and diesel, have since spiked.

   The Hormuz strait closure is also affecting some 5 million bpd of refined 
product exports, mostly middle distillates. The Persian Gulf region, centered 
on the strait, has become a significant diesel supplier to Europe since the 
European Union banned product imports from Russia in February 2023. European 
diesel inventories, compared to crude oil stocks, are in a much weaker position 
to absorb a supply shock of this magnitude.

   As of Wednesday, European gasoil futures have soared by 67% since the start 
of the U.S.-Israeli war on Iran, compared to NYMEX ULSD futures which 
appreciated by 47% in that time. This widening arbitrage window is likely to 
draw more diesel barrels from the U.S. Gulf Coast to Europe. At the same time, 
we can expect to see more clean cargos leaving for Asia from PADDs 1 and 3 as 
the region is suddenly short of around 1 million bpd in refined product supply.

   Last week's surge in U.S. refined exports -- the 7.6 million bpd pace was 
the third-highest weekly number on record -- came not on the back of finished 
fuels, but other oils such as light liquids from natural gas processing, 
condensates not classified as crude oil, unfinished oils, and a slew of fuel 
blending components.

   U.S. exports appear to have room to add to the acceleration. Export capacity 
for clean products is far more limited than for crude oil, but finished fuel 
exports are still 10% off their pre-COVID highs. Over the past four weeks, 
finished gasoline exports clocked in at 942,000 bpd, up 17% year-on-year, and 
combined exports of distillate fuel oil and jet fuel were up 11% from the same 
period last year.




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