The U.S. has become a major player in the global oil market, thanks to the shale revolution that has unlocked huge amounts of oil from the tight and low-permeability formations, using horizontal drilling and hydraulic fracturing technologies. The shale revolution has enabled the U.S. to become the world’s largest producer and exporter of oil and petroleum products, and to achieve energy independence and security. The shale revolution has also created economic and environmental benefits, such as lower oil prices, higher revenues, more jobs, and lower emissions.

But the shale revolution has also brought new challenges and opportunities for the U.S. oil industry, as it has to cope with the fluctuations and the shocks of the global oil demand and supply, such as the COVID-19 pandemic, the OPEC+ production cuts, and the geopolitical tensions. The shale revolution has also affected the dynamics and the relationships of the various oil benchmarks, such as West Texas Intermediate (WTI), Brent, Western Canadian Select (WCS), and Magellan East Houston (MEH). These benchmarks are the reference prices for the different grades and locations of oil and petroleum products in the U.S. and the international markets, and they reflect the quality, the transportation cost, and the market conditions of the oil and petroleum products. The benchmarks are also used to price the oil and petroleum products contracts and transactions, and to hedge the oil and petroleum products price risk. The benchmarks are connected and interact with each other, depending on the availability and the accessibility of the oil and petroleum products supply, the demand and the preferences of the oil and petroleum products buyers, and the arbitrage and the competition of the oil and petroleum products markets.

One of the key insights that emerges from the analysis of the U.S. oil market is that the U.S. crude oil and petroleum product export markets have changed and evolved significantly in the past decade, and that this change and evolution will continue and accelerate in the future. The U.S. crude oil and petroleum product export markets have changed and evolved significantly, because:

• The U.S. crude oil and petroleum product export volumes have increased dramatically, as the exports provide an outlet and a market for the surplus oil and petroleum products that are not consumed by the domestic refineries or end-users. The U.S. crude oil and petroleum product export volumes have increased from about 1.5 MMb/d in 2010 to about 8.6 MMb/d in 2020, according to the U.S. Energy Information Administration (EIA). The U.S. crude oil and petroleum product export volumes are expected to increase further to about 9.4 MMb/d in 2021 and 10.2 MMb/d in 2022, according to the EIA. The U.S. crude oil and petroleum product export volumes are mainly driven by the production growth, the infrastructure development, the price differentials, and the market demand of the oil and petroleum products.

• The U.S. crude oil and petroleum product export destinations have diversified and expanded, as the exports provide a competitive advantage and a market share for the U.S. oil industry in the global markets. The U.S. crude oil and petroleum product export destinations have diversified and expanded from about 30 countries in 2010 to about 180 countries in 2020, according to the U.S. Census Bureau. The U.S. crude oil and petroleum product export destinations are mainly concentrated in Asia, Europe, and Latin America, which have a high and growing demand for oil and petroleum products. The U.S. crude oil and petroleum product export destinations are mainly influenced by the quality and the availability of the oil and petroleum products, the transportation and storage costs and constraints of the oil and petroleum products, and the geopolitical and regulatory events and developments of the oil and petroleum products.

• The U.S. crude oil and petroleum product export modes and methods have improved and optimized, as the exports provide a challenge and an opportunity for the U.S. oil industry to access and serve the global markets. The U.S. crude oil and petroleum product export modes and methods have improved and optimized from using mainly pipelines, barges, and smaller vessels in 2010 to using mainly pipelines, terminals, and larger vessels in 2020, according to the EIA and the U.S. Maritime Administration. The U.S. crude oil and petroleum product export modes and methods are mainly focused on the Gulf Coast, which accounts for about 80% of the total U.S. crude oil exports and 60% of the total U.S. petroleum product exports, according to the EIA. The U.S. crude oil and petroleum product export modes and methods are mainly determined by the supply and the demand of the oil and petroleum products, the capacity and the availability of the pipelines, terminals, and vessels, and the efficiency and the profitability of the pipelines, terminals, and vessels.

The change and the evolution of the U.S. crude oil and petroleum product export markets mean that the U.S. oil industry will continue to play a vital and influential role in the global oil market, as the U.S. oil benchmarks, such as WTI, Brent, WCS, and MEH, will reflect and respond to the changes and the trends of the U.S. crude oil and petroleum product export markets, and the availability and the accessibility of the U.S. crude oil and petroleum product supply, the demand and the preferences of the U.S. crude oil and petroleum product buyers, and the arbitrage and the competition of the U.S. crude oil and petroleum product markets.

“Dock of the Bay” is a report that provides a comprehensive and detailed analysis of the U.S. crude oil and petroleum product export markets and how they have changed and evolved significantly in the past decade. The report covers the history, the current status, and the future outlook of the U.S. crude oil and petroleum product export markets, and how they affect the markets, the infrastructure, and the benchmarks of the oil and its byproducts. The report also provides data, charts, and maps that illustrate the trends and the insights of the U.S. crude oil and petroleum product export markets. The report is part of RBN Energy’s 2023 Drill Down report series, a suite of reports covering many of the key issues expected to impact the markets for crude oil, natural gas and natural gas liquids.