U.S. Crude Becomes Global Price Setter as Shale Boom Continues

The United States has become a leading player in global crude markets, thanks to its shale oil boom and the lifting of the country's crude export ban in 2015. Euan Craik, the global head of oil at Argus Media Ltd., attributes this shift to the industry's revamping of shipping and pipeline infrastructure along the U.S. Gulf Coast, allowing for the export of oil rather than just importing it.

According to Craik, the shale boom was a 'tremendous release valve' for the oil industry, enabling continued expansion of U.S. production. With domestic refineries running at full capacity, every additional barrel had to be exported. This surge in supply has led to U.S. crude becoming the baseload supply for Europe, particularly after Russia's invasion of Ukraine and subsequent sanctions.

Craik notes that refineries in the UK and EU are now primarily running on U.S. oil, with Asia also being an important market. Around 1.5 million barrels per day of U.S. crude is going to Asia, with Japan and South Korea being major buyers. China and India are also increasingly relying on U.S. crude.

The WTI crude oil complex has become a global price setter, with its inclusion in the Brent benchmark. This has led to WTI setting the Brent price most of the time, influencing pricing throughout the world. Craik sees this as a 'total sea change' and believes that the U.S. has arrived as an oil power.