U.S. crude oil exports surge to record as tankers flock to Gulf Coast during Iran war

The Port of Corpus Christi has never been busier as tankers from around the world flock to the U.S. Gulf Coast to load up on crude oil during the Iran war.

The Texas port was the third-largest oil export terminal in the world before the war behind Ras Tanura in Saudi Arabia and Basra in Iraq.

Its importance has only grown since, as U.S. crude oil exports have surged to a record and the two big Persian Gulf ports are largely cut off from the world due to Iran's blockade of the Strait of Hormuz.

U.S. oil exports have jumped to 5.2 million barrels per day (bpd) in April, a more than 30% increase over the 3.9 million bpd exported in February before the war, according to data from Kpler.

March was the busiest month in the history of the Port of Corpus Christi, and the first quarter was its busiest quarter ever, said CEO Kent Britton. Oil exports have increased to about 2.5 million barrels per day since the war started compared to 2.2 million bpd last year, Britton said.

Ship traffic in Corpus Christi rose to more than 240 vessels in March compared to the 200 the port normally sees in a month, the CEO said.

"It's a constant parade of tankers coming in and out," he said.

Asian buyers

Corpus Christi accounted for about half of U.S. crude oil exports in April while Houston made up most of the rest, according to data from Kpler.

Some 50 to 60 big tankers called very large crude carriers (VLCCs) are heading to U.S. ports on any given day right now, double the volume seen last year, Kpler's data shows. VLCCs can typically carry up to 2 million barrels.

Many of those tankers are coming from Asian countries that imported their oil from the Middle East before the war, said Matt Smith, director of commodity research at Kpler. They are now turning to the U.S. Gulf Coast because the trade route into the Persian Gulf through the strait is effectively closed.

"Asian markets are buying whatever they can get their hands on, so they're taking a lot of light sweet crude," Smith said.

Corpus Christi has also seen a big increase of refined product exports to the Middle East. The volume of those exports to the region was higher in the first quarter than all of last year, Britton, the CEO, said.

Export limits

The re-routing of ships to the U.S. Gulf Coast is probably more of a wartime crisis measure than a permanent realignment of Asian buyers to the U.S.

Light sweet crude oil that the U.S. produces is a poor substitute for sour Middle East barrels because of the way many refineries are configured to optimize heavy feedstocks, Smith at Kpler said.

What's more, U.S. oil exports are probably capped somewhere just above 5 million bpd just due to dock capacity, said Smith. Corpus Christi's export capacity maxes out at about 2.6 million bpd due to pipeline constraints, but could probably handle another 500,000 bpd if pipelines were expanded, CEO Britton said.

The U.S., Latin America and West Africa can help supply incremental barrels to Asian buyers in need. But the Middle East is just too big of an oil producer to be replaced, Smith said. Some 20% of global oil supplies were exported through the strait before the war.

"It's a hole that can't be plugged," Smith said. "The answer has to be ensuring secure supply from the Middle East."