US Oil Exports Limited by Infrastructure Constraints Amid Global Supply Gap

The recent surge in crude oil prices has put pressure on the US to supply more crude and refined products to the global market. The price of WTI (West Texas Intermediate) reached over $100/bbl after Saudi Arabia's East-West Pipeline was damaged by Houthi drone attacks, but it has since eased back to around $95/bbl following rumors of a potential deal with Iran.

The disruption to the pipeline and other Middle Eastern supply disruptions have created a 5-6 MMb/d global supply gap, which is larger than what the US can currently fill. Despite the high prices, infrastructure constraints in the US are limiting how much crude oil can be exported. Pipelines are operating at near-full capacity, with only about 500 Mb/d of spare capacity on Houston- and Corpus Christi-bound Permian oil pipes.

The East Daley Crude Hub Model estimates that these pipelines are already operating at around 95% utilization toward Corpus Christi and 90% toward Houston and Nederland. Export docks in Corpus Christi and Houston are also running at high levels, with Buckeye Partners' Texas Hub in Corpus Christi operating at roughly 86% utilization.

The US natural gas pipeline sample, a proxy for change in oil production, decreased by 1.8% W-o-W across all liquids-focused basins for the week ending Sept. 21. Volumes only increased in the Rockies W-o-W, up 2.4%. The decline came from various basins, including the Gulf of America (-3%), Permian (-1.3%), Barnett (-6.3%), Arkoma (-0.1%), the Eagle Ford (-14.7%), Bakken (-1.7%), and the Anadarko (-1.5%).