Most new US crude now sold overseas – and share is growing

The fate of U.S. crude production is a big deal for the transportation industry, not just because it affects fuel costs, but because it’s such an important driver of demand.

U.S. crude output buoys ocean-going tanker rates; fills rail cars with oil and frac sand; and proffers trucker loads of equipment, water, frac sand and oil.

Transportation feels the pain whenever drilling output stumbles. Two recent examples: the closure of Dallas-based trucking company Stevens Tanker Division due to a reduction in frac-sand demand and reports by Commtrex that railcar storage hasn’t been this lofty since 2016, courtesy of a slump in dry bulk demand and “big downturns” for frac sand.

In terms of what’s next for U.S. crude production, the best bellwether to watch may not be American consumer and industrial demand, as it has been in the past. It could be what’s happening overseas.

Incremental U.S. production is increasingly being sold to buyers in Asia, Europe and South America. Consequently, transportation players, regardless of mode, should more closely watch developments involving U.S Gulf Coast pipelines, terminals and tanker trades – as opposed to what’s going on at the local pump.