The US ending a ban on crude oil exports will not trigger a large volume of exports, according to Deutsche Bank.A relatively tight Brent-WTI spread and OPEC’s public recognition of the threat of US tight oil production growth suggest that both domestic US and global energy markets have been largely exposed to the effects of rising supply rather than insulated by the ban on US exports of crude oil.

Indeed the collapse in sweet West African crude exports into the US is a clear sign that rising US oil production is already having a global impact. “As a result we would not expect that a lifting of the ban tomorrow would immediately trigger a large volume of oil exports, Deutsche Bank said.

Since 2012, there have been a number of adjustments in the supply and infrastructure mix in the US which have effectively accommodated tight oil supply. These are the decrease in light crude imports, and the additional pipeline capacity transporting crude to the Gulf Coast refinery complex.

The decline in net imports since 2007 has exceeded the combined rise in crude production and the fall in US oil demand over the same period. This fact demonstrates that markets are adjusting to rising US oil supply in a healthy fashion.

However, this does not preclude the possibility that further US supply increases will again introduce strains. Indeed further growth in US crude oil production from tight oil development may not be so easily absorbed as light crude imports (>35° API) have now been reduced to 0.5 mmb/d.

“In the event of a loosening of export restrictions, we note that exports would face some of the same infrastructure constraints as bringing Canadian and Midcontinent crude to Gulf Coast refining centers as many US oil ports are located in Texas and Louisiana,” Deutsche Bank added.
Source: Deutsche Bank