As Europe and Asia struggle with oil supply due to the Iran war, U.S. exports of petroleum products have hit an all-time high. Still, analysts said the export boom could become a political liability for U.S. President Donald Trump.
On the 6th, the Financial Times (FT) in the United Kingdom, citing U.S. Energy Information Administration (EIA) data, reported that U.S. refiners' exports of refined products such as gasoline, diesel, and jet fuel surpassed 8.2 million barrels a day last week. That is more than 20% higher than the same period last year and a record high.
With overseas demand surging in the wake of the Iran war, U.S. refiners are reaping massive revenue. If prices stay at current levels, U.S. refiners' free cash flow (FCF) is expected to increase by more than $60 billion (about 87 trillion won) this year.
However, the increase in petroleum product exports is becoming a political burden for President Trump. As U.S.-made refined products flow overseas in large volumes, gasoline prices at home are rising. The current average price of gasoline at U.S. gas stations is $4.53 per gallon (about 3.78 liters), the highest in four years. In particular, with the midterm elections coming up in Nov., the growing burden of fuel costs on voters is also weighing on President Trump.
On top of that, as exports rise, U.S. oil inventories are falling quickly, fueling concerns about supply shortages. Jeff Currie, senior energy adviser at private equity firm Carlyle, assessed that the pace of the U.S. inventory drawdown is fast. In particular, U.S. diesel inventories are at a 20-year low. Currie said, "A supply shortage begins not when supply is cut off, but when inventories run out."
Because of this, there is speculation that the Trump administration, which had said it would not restrict fuel exports, could ultimately move to impose export controls. Robert Yawger, a commodities expert at global securities firm Mizuho Securities, said, "From the administration's standpoint, the situation is getting harder and harder," adding, "If the average gasoline price reaches $5 per gallon, they will have no choice but to pull out the export restriction card."
Currently, international oil prices are swinging sharply on President Trump's remarks. When Trump said that U.S. military operations would end soon and the Strait of Hormuz would be opened, the price of Brent, the benchmark for international crude trading, surged to $109 per barrel before at one point plunging to $97.
Meanwhile, buoyed by rising exports, the United States has become a net crude exporter for the first time since World War II, FT reported. As recently as about a decade ago, the United States was among the world's largest crude importers, but with the Strait of Hormuz—through which about 20% of global crude supply passes—sealed off due to the Iran war, the country has emerged as a key player in energy supply.