Petchem Demand, Tightening Sulphur Rules to Boost U.S. Crude
U.S. oil will expand its share of international markets as shifting demand makes light crude grades more attractive and as the nation doubles its export capacity, the International Energy Agency (IEA) said on Monday.
The IEA said in its five-year outlook that U.S. shale oil output would surge, stealing market share from the Organization of the Petroleum Exporting Countries. The IEA said demand developments would also drive buyer interest in U.S. oil.
"Conventional wisdom has it that rapidly rising (light tight oil - LTO) production is incompatible with the need of refiners to process heavier, sourer crudes, given earlier investments," the IEA said. "This will not, in fact, be the case." LTO is another term used for shale oil production. The IEA said demand growth, which is shifting to petrochemicals, and new International Maritime Organization (IOM) rules cutting the amount of sulphur in shipping fuels would boost interest U.S. oil
"U.S. exports will also be ideally placed to meet the need, post-IMO, for more low-sulphur crude, with a low yield of fuel oil," the IEA said. It also said lighter U.S. crude would help meet Asian demand for petrochemical feedstocks.
While U.S. oil exports have grown substantially since the export ban was lifted in 2015, rising to close to 2 million bpd, the IEA said infrastructure investments will help this expand further. "Ten crude oil export facilities are either being upgraded or built. As a result, by 2023 capacity is expected to more than double from current levels to about 4.9 million barrels per day (bpd)," the IEA said, adding that Corpus Christi, Texas, will become the main Gulf Coast export hub.
Reporting by Libby George
