Crude oil exports out of Texas ports are enjoying a bump in the wake of Russia's invasion of Ukraine, with more crude flowing out from the Gulf Coast that otherwise would have remained in domestic markets, analysts say.
But that increase may not be sustainable over the long term.
Part of the reason for the export increase is that Brent crude, the global benchmark for oil prices, is trading at a premium of more than $10 compared to the U.S. benchmark — West Texas Intermediate, or WTI. That means U.S. producers can reap much greater profits by selling their crude overseas.
Analysts say much of the increase in exports is going out through Corpus Christi and the Beaumont-Port Arthur region, while the Houston area has actually seen a slight dip.
"Corpus Christi is up a little bit year over year," said David Braziel, CEO of analytics firm RBN energy. "They had averaged about 1.7 million barrels per day in 2021, and so far this year, Corpus Christi is averaging about 1.8 million barrels a day of crude oil exports."
Ryan Saxton, head of oil data at research firm Wood Mackenzie, said that crude oil exports out of Houston this month are averaging around 1.29 million barrels per day, down about 100,000 barrels per day from January. But they're still averaging well above 2021 levels of less than 1 million barrels per day.
For the Port of Beaumont, March exports are a little more than 230,000 barrels per day, Saxton said. In January, exports came in just under 90,000 barrels per day.
The port’s exports are set to reach the highest exports since September 2020, Saxton added.
Those exports are largely destined for Northwest Europe, where they're helping to replace lost production from Russia. But the U.S. will have to ramp up production to keep those exports flowing, and so far, investors have been reluctant to pay for such extra production.
"That’s only going to happen when U.S. producers think that the price outlook for domestic crude is going to be favorable for them, given the fact that they’ve just come off one of the worst bust periods in U.S. history," David Braziel said. "And so there's what's called capital discipline, which is where producers are more incentivized in today's market to return cash back to shareholders in the form of dividends (than to spend money on exploration and production)."
