The United States exported oil at record levels in April, rushing to fill a global supply gap amid the Iran war, even as gas and oil prices remained stubbornly elevated.
April exports averaged 5.3 million barrels per day over four weeks, up from 3.8 million at the end of March, according to the U.S. Energy Information Administration's weekly exports data.
The week ending April 24 was the standout as exports spiked to 6.4 million barrels per day before pulling back to 4.8 million barrels per day in the following week. Despite a drop of more than 2 million barrels per day, crude oil exports remain well above the roughly 4 million barrels shipped overseas daily in the same period last year.
Start the day smarter. Get all the news you need in your inbox each morning.
“That’s really a big one-week jump," said Brian Prest, economist at Resources for the Future. “That week ending April 24 is the first week in modern American history where the U.S. has been a net crude oil exporter.”
The surge of U.S. exports reflects how oil markets are adapting to the supply disruption caused by Iran’s closure of the Strait of Hormuz following U.S. and Israeli strikes on the country starting Feb. 28.
Market participants are finding ways to connect supply with demand amid a historic supply disruption, said Clayton Seigle, a senior fellow for energy security at the Center for Strategic and International Studies. "Oil markets are operating efficiently, even in a time of crisis.”
The world has lost 13 million barrels per day from the Middle East for more than two months due to the war, Seigle said. Regions that rely heavily on Middle Eastern oil, especially Asia, are facing supply shortages.
The United States, the world’s largest oil producer, thus has “an opportunity to temporarily fill in the gaps in oil supply around the world.”
Why not keep the oil here?
Right now, it’s better for U.S. producers to export oil because overseas buyers are paying more for it than domestic ones would, said Greg Upton, the executive director of the Center for Energy Studies and a professor at Louisiana State University.
Since the start of the war, the United States has exported over 280 million barrels over nine weeks, drawing down the country's strategic petroleum reserves in the process. The Department of Energy released nearly 23 million barrels from the reserve since late March, part of the 172 million barrels the DOE is authorized to release by President Donald Trump. As of May 1, the reserves stood at about 392 million barrels.
Yet, oil and gas prices have remained elevated.
Brent crude oil, the international benchmark, was trading above $100 a barrel as of 4 p.m. EDT on May 6. West Texas Intermediate Crude, which comes from American producers, fetched about $95.
That could shift at some point, however. If WTI is used more, and Brent demand ticks lower, the gap between the two prices may narrow, making WTI less attractive. More importantly, the cost of transporting Brent from the Gulf Coast to places like Asia and Europe may also start to add up, said Rob Wilson, president of East Daley Analytics, an energy consultancy.
Experts say keeping more oil in the United States would not necessarily lower domestic gasoline prices.
The price of oil, which is used everywhere in the world, is set globally, Seigle said. “A supply disruption anywhere increases prices everywhere."
The current national average gas price per gallon is $4.54, according to the latest AAA data.
Even if crude oil stays in the United States, domestic refineries are already running near maximum capacity. “No matter how much more crude oil you have here instead of sending overseas, we're not going to be able to create more gasoline here,” Seigle added.
What’s next?
Experts say whether the U.S. gas price continues to rise or begins to fall will depend on how long disruptions in the Middle East last.
“We are, unfortunately, probably on our way to revisiting that all-time high of the nationwide pump price, just above $5 a gallon, that we saw in 2022,” said Seigle.
In summer 2022, the national average gas price in the United States passed $5 a gallon, driven by Russia's invasion of Ukraine.
“It's simply not sustainable,” said Seigle as the United States continues to supply the oil to the rest of the world to fill the energy gap created by the war. “We have to get those Mideast export flows going again if we want to have reasonable fuel prices.”
But American companies might also boost supply.
On May 5, President Donald Trump hailed what he called “Great Progress” toward a deal with Iran. Global oil markets responded, sending prices down sharply. Still, progress has been elusive so far in the conflict, and the longer it drags on, the more incentive U.S. producers have to increase their output, Wilson told USA TODAY.
Diamondback Energy, a shale producer, on May 4 said it would step up both its fracking and its drilling operations, calling higher prices a “catalyst.” Wilson thinks other producers may follow suit.
At the end of the day, U.S. consumers will pay prices for what’s going on in the global market. “Whether that’s good or bad depends on those global events,” said Prest with Resources for the Future.
On the other hand, if the conflict drags on long enough, U.S. legislators may be motivated to set policy to shield American consumers, Upton said. As recently as 2016, U.S. producers weren’t allowed to export oil. That ban was lifted only because domestic refineries couldn’t keep up, he noted.
Correction: A quote in the fourth paragraph has been updated to correct the timeframe of when the U.S. was last a net exporter of crude oil.
This article originally appeared on USA TODAY: US oil exports hit record high. What does this mean for gas prices?
