American crude oil exports reached an unprecedented level of 5.6 million barrels daily during May, as ongoing Middle East conflicts drove international refiners to seek alternative supply sources, according to shipping data released Monday.
The conflict between the U.S. and Israel against Iran has created the most significant disruption to global energy markets on record, forcing refiners worldwide to find replacements for Middle Eastern oil. The Strait of Hormuz, a crucial shipping channel that handles approximately 20% of global oil and gas transportation, was effectively shut down when hostilities began in late February.
May’s export figures exceeded the previous record of 5.2 million barrels per day established in April, data from analytics company Kpler revealed. The surge coincided with U.S. West Texas Intermediate crude trading at a significant discount compared to Brent, the international pricing standard.
The pricing gap between WTI and Brent reached as wide as $20.69 per barrel in March, marking the largest differential in 13 years. During April, when many May export contracts were negotiated, the spread averaged approximately minus $8.86, compared to the pre-war average of minus $4.85.
Both European and Asian markets achieved record import levels in May, with Asia purchasing 2.45 million barrels daily to maintain its position as the leading buyer for the second consecutive month. European imports closely followed at 2.4 million barrels daily.
Japan, which traditionally sources most of its crude from Middle Eastern suppliers, led Asian purchases of American oil at 808,000 barrels daily in May – representing a 32% monthly increase and establishing a new high.
“It’s not a surprise to see Asia pulling so much given the loss of barrels from the Mideast Gulf,” commented Matt Smith, Director of Commodity Research at Kpler.
Shipments destined for Mediterranean and Black Sea regions also achieved record levels during May, with Bulgaria, Croatia, Turkey and Greece becoming unusual transatlantic purchasers. Italy’s record imports of 335,000 barrels contributed significantly to increased European demand.
“We believe the Asian buying was mainly driven by necessity while European buying was mainly favorable shipping economics and lower transatlantic freight rates,” explained Rohit Rathod, a senior oil market analyst at Vortexa.
Approximately 283,000 barrels daily, representing about 5% of May’s total exports, originated from America’s strategic petroleum reserve. This oil, drawn from the ongoing release of 172 million barrels from emergency stockpiles to counter rising prices, was shipped to both European and Asian customers.
Following May’s exceptional performance, export volumes are projected to decline in June as potential peace negotiations have reduced supply concerns and narrowed the WTI-Brent price difference. While the discount remained substantial in early May, it diminished during the month’s second half and was trading around minus $6 on Monday.
Energy Aspects consultancy projects exports will average approximately 4.9 million barrels daily in June and about 4.60 million barrels daily in July.
“We would expect exports to fall by over 1 million bpd in June compared to May,” stated Georgios Sakellariou, chartering analyst at Signal Maritime, noting his company has observed at least 10 fewer Very Large Crude Carriers scheduled for June compared to May.
Reduced WTI crude inventories within the United States will also encourage more domestic storage rather than exports, according to industry sources and analysts.
Pricing for America’s primary export grades – WTI Midland crude at East Houston and Mars sour crude – both weakened for July trading as demand decreased. MEH traded at a $1.15 premium to WTI on Friday, down from a high of $7.75 in April for May delivery. Mars traded at a $1.50 premium Friday, compared to an April peak of $17.50.
