US exports of crude oil reached 5.6 million barrels in May, a record level as importers scour new origins to replace supplies inaccessible due to the closure of the Strait of Hormuz, a Reuters analysis of ship tracking data showed on Monday.
Exports were an increase compared with April's 5.2 million barrels exported, according to Kpler, with US West Texas Intermediate prices trading at a wide discount to global benchmark Brent futures contracts.
US crude grades are usually expressed as differentials to the WTI price, and their large discount versus Brent makes them more economical for foreign buyers to import US crude, even factoring in sometimes longer shipping routes.
The discount for WTI reached as much as $20.69 per barrel versus Brent in March, just as the Iran war began, the widest in 13 years, the article said.
Most of the deals for US crude exports in May were transacted in April, with the discount averaging about $8.86, deeper than the $4.85 average discount prior to the war.
Asia accounted for almost half of the May US exports at 2.45 million barrels per day, the article said, while Europe was not far behind, taking 2.4 mmbbl/d.
Japan alone bought 808,000 b/d, rising 32% on the month before, a record for the country and reflecting the fact that it usually relies on the Middle East for its oil imports.
There were also record shipments to Mediterranean countries and the Black Sea area in May, with Bulgaria, Croatia, Turkey and Greece making an unusual appearance in the transatlantic market.
Italy imported 335,000 barrels per day, pushing up the European import figure.
Vortexa Senior Oil Market Analyst Rohit Rathod said while Asian buying was to meet near-term need, European buying was largely down to lower transatlantic freight rates, the article said.
About 283,000 b/d or 5% of US crude exports to Europe and Asia in May were from US strategic petroleum reserves. About 172 million barrels are now being released from the reserves to combat rising prices.
Exports are likely to soften in June as guarded optimism about a US-Iran peace deal reduce the sense of panic, narrowing the WTI discount to Brent as the latter retreats in price.
Consultancy Energy Aspects sees average US exports in June of 4.9 mmbbl/d and 4.6 mmbbl/d for July, the article said.
Chartering analyst at Signal Maritime, Georgios Sakellariou told Reuters he expected a drop of about 1 mmbbl/d in June versus May, with 10 fewer Very Large Crude Carriers observed for June.
At the same time, low WTI crude inventories in the US will create an incentive to put more into domestic storage, several sources for the article said.
WTI Midland crude shipping from East Houston and Mars sour crude both fell in price for July trade, on weaker demand.
MEH traded at a $1.15 premium over WTI last Friday, while premiums had climbed to as much as $7.75 in April, for May shipment.
The fall in Mars was more dramatic, slipping to a premium of $1.50 by Friday versus $17.50 in April.