The United States hasn’t been a net exporter of oil and oil products since World War II. Now, it is on course to become a net exporter next year, with oil and product exports already hitting record highs of 3.4 million bpd and 3 million bpd respectively.
Meanwhile, Reuters reports, citing official data from the Energy Department, imports of crude oil are on a decline, falling to just 1.1 million barrels daily in November. That’s compared with some 7 million bpd in crude imports five years ago.
In fairness, the export-import balance this year was substantially affected by the massive 180-million-barrel release of crude oil from the strategic petroleum reserve, which the Biden administration used to fight soaring retail fuel prices.
The expectation that the U.S. will become a net exporter of oil hinges on one big assumption: a faster ramp-up of shale oil production.
“Russia’s invasion of Ukraine has spurred new demand for U.S. energy and should push oil exports above imports late next year assuming shale output accelerates,” Vortexa market analyst Rohit Rathod told Reuters.
If shale output does not accelerate, then in order to become a net exporter, the U.S. would have to reduce demand, the report notes. However, this is quite unlikely. In fact, demand for oil in the world’s biggest consumer is projected to rise next year, albeit by a modest 0.7 percent, to 20.51 million bpd.
U.S. oil production is forecast to reach a record high of 12.34 million bpd next year but, again, that is based on the assumption that shale oil production growth will accelerate. For now, most drillers appear to be reluctant to go back to the growth-at-all-costs mode of the past.
Instead, they are taking a more cautious approach and prioritizing the return of cash to shareholders after years of burning through it to ramp up growth. The energy policies of the Biden administration have also had a discouraging effect on the oil industry because of their focus on the transition away from fossil fuels.