Two tankers of US oil arrived in Europe last week, delivering the first cargoes allowed since Washington repealed a decades-old ban on exporting crude. With two more vessels now crossing the Atlantic, oil market watchers have a simple question: why? Benchmark US crude costs as much as its international peer pumped from the North Sea. The economics suggest it would cheaper for a European refiner to buy in its own backyard — say, from Algeria — than pay to haul oil all the way from Texas. Yet the tankers Angelica Schulte and Minerva Astra are now steaming towards France and Italy with a combined 1.2m barrels on board, according to Clipper Data.
The surprising spurt of traffic points to an emerging new reality since US President Barack Obama signed a law allowing unfettered exports last month. The flows, while modest, suggest traders are already finding ways to profit by shipping American oil abroad, even as it remains one of the world’s biggest crude oil importers. Despite seemingly uncompetitive prices, some grades of US oil might be attractive in certain markets, or made appealing by blending or using strategies understood by sophisticated trading houses. Few expect a flood of US oil upending world markets. On Monday, West Texas Intermediate, the US benchmark, traded at $31.30 a barrel. The global benchmark Brent traded at $31.28. “If you look at the Brent-WTI spread, the curve is telling the market to keep light, sweet crude domestic,” says Thomas Ramsey, chief executive of Texas-based Centurion Terminals and a former senior executive at Vitol, the world’s largest independent oil trading house.