In a dynamic that shows just how far U.S. oil production has come in recent years, the U.S. Energy Information Administration (EIA) said on Monday that in the last two months of 2018, the U.S. Gulf Coast exported more crude oil than it imported.
Meanwhile, U.S. crude oil production, particularly in the Gulf Coast region, is still increasing. In November 2018, U.S. Gulf Coast crude oil production set a new record of 7.7 million b/d, the IEA report added. However, since most of the oil produced in the U.S. is light sweet crude, the U.S. still has to rely on heavier crude blends from Saudi Arabia, Venezuela and others since most American refineries are configured to process heavy crude. On the other hand, a surplus of light sweet crude allows the U.S. to export more oil thus giving the country growing energy geopolitical power once enjoyed almost exclusively by Saudi Arabia and Russia. The increasing amount of U.S. crude being exporter, along with the increasing amount of U.S. LNG being imported (with exports of both fuels projected to increase) is changing energy geopolitics.
U.S. oil weapon possibilities
Evidence of growing American energy clout was evident last week when Secretary of State Mike Pompeo urged the oil industry to work with the Trump administration to promote U.S. foreign policy interests, especially in Asia and in Europe, and to punish what he called “bad actors” on the world stage. Pompeo made his remarks at IHS Markit’s CERAWeek conference in Houston, where U.S. oil and gas executives, energy players and OPEC officials usually gather annually to discuss global energy development. Pompeo’s added that America’s new-found shale oil and natural gas abundance would “strengthen our hand in foreign policy.” He added that the U.S. oil-and-gas export boom had given the U.S. the ability to meet energy demand once satisfied by its geopolitical rivals.
This is the first time, in at least recent history, that American officials have considered using oil production and exports for geopolitical advantage. One of the last times the country had such oil production clout dates back to the years just before World War II when the U.S. held back oil exports to Japan. Consequently, this was one of the mitigating factors that provoked Japan to attack Pearl Harbor in 1941. Moreover, Pompeo’s comments can be viewed as a reversal from the so-called oil weapon that Arab producers have used on the U.S. and its western allies for decades, including both the unsuccessful 1967 Arab oil embargo and the 1973 Arab oil embargo that brought the U.S. and its allies to their knees, driving up the price of oil four-fold and contributing to severe economic headwinds for the West and a geopolitical and economic shift that still persists to the current.
Full article: U.S. ‘’Oil Weapon’’ Could Change Geopolitics Forever (OilPrice)