OPEC all but trashed the tanker market with its output cuts. That the damage hasn’t been even worse is thanks in large part to a flood of U.S. crude exports, particularly to Asia, Bloomberg reports.
China zoomed past Canada to become the biggest foreign destination for American crude in February, accounting for more than 8 million barrels of U.S. cargoes. Tanker tracking is indicating no let up in U.S. oil flooding to Asia in March, boosting shipments on what is one of the industry’s longest-distance trade routes.
Freight rates for oil collapsed this year after the Organization of Petroleum Exporting Countries and other nations reliant on crude sales announced production cuts in a bid to prop up prices. The curbs have driven Chinese and other Asian buyers to places like the U.S. and the North Sea to source crude like never before, adding the vital ingredient of distance to tanker demand.
That rates aren’t worse is partly thanks to Asian refiners scouring the earth to replace supplies lost from OPEC’s core members in the Middle East. West African exporters — including Nigeria, which is exempt from the producer club’s cuts — are sending record amounts of oil to Asia this month, tanker tracking data show.