Crude oil exports from the United States to Europe declined in June, hitting the lowest in two years.
This is according to data from Kpler that Reuters cited in a report, also saying that the average daily last month stood at 1.45 million barrels, which was 14% below average daily export levels in May and a 27% decline from June 2023.
The report pointed to the narrowing gap between Brent crude and West Texas Intermediate, which makes the latter costlier for buyers. WTI is currently trading at around $83 per barrel, while Brent crude is changing hands at close to $87 per barrel.
What’s more, WTI was last year included in the composition of the Brent crude benchmark, affecting the overall price and tying it tighter to the price of the U.S. benchmark.
Overall U.S. exports of crude oil also declined last month, going down from 4.21 million barrels daily in May to 3.94 million barrels daily.
Meanwhile, Reuters last month reported that the U.S. benchmark has become the dominant member of the Brent crude composition because of surging shale oil exports from the United States. According to data from S&P Global Platts, WTI Midland is setting the price of dated Brent more than 50% of the time.
The change in the price-setting dynamics for the global benchmark came on the back of record U.S. crude exports at the end of 2023 when the daily average reached 2.94 million barrels, per Kpler data again. Half of that, or 1.71 million barrels daily, went to Europe.
The recent decline comes mostly because of freight costs. Given WTI’s dominant role in the price-setting process for dated Brent, with a narrowing gap between the benchmarks, buyers would look to save money somewhere, and that somewhere is typically shipping costs, opting for crude coming from a closer location than the U.S.
By Irina Slav for Oilprice.com
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