Stephanie Kelly and Robert Harvey
4 min read
By Stephanie Kelly and Robert Harvey
NEW YORK (Reuters) -Rising OPEC+ supplies and new streams of oil coming online globally are increasing options for European and Asian refiners and weighing on export demand for light sweet U.S. crude, contributing to lower prices in the country's main oil-producing regions.
The U.S., the world's largest crude producer, is facing increasing competition as the Organization of the Petroleum Exporting Countries and its allies pump more oil in a bid to regain market share and punish members that over-produce.
Since April, OPEC+ countries including Saudi Arabia and Russia have made or announced increases totaling 1.37 million barrels per day, or 62% of the 2.2 million bpd they aim to add back to the market.
The additional supplies come at a time of broad uncertainty for global oil producers as they assess how volatile trade policies are impacting the world's economic outlook and prepare for a longer-term future in which greener fuels could displace their barrels.
For the U.S., lower demand for a significant portion of its crude will likely add to a complicated outlook for producers already digesting on-again, off-again tariffs from President Donald Trump's administration. Companies are considering cutting output and jobs even as Trump urges higher domestic production.
U.S. exports fell to an average of 3.8 million bpd in May from an average of 4 million bpd in April, according to an analysis of weekly Energy Information Administration data.
Prices have declined for crudes such as WTI-Midland, a key sweet grade from the U.S. shale region. Since early March, its price is off by 45% to a 60-cent premium to U.S. crude futures.
Light Louisiana Sweet from the U.S. Gulf Coast has fallen by about 30% to a $2.70 per barrel premium over the same period.
"That's a part of OPEC accelerating. Light sweets are weak, broadly speaking," said Jeremy Irwin, global crude lead at Energy Aspects, adding that demand is expected to fall further as European refiners favor medium crudes in the summer months.
The U.S. sent 1.4 million bpd of light, sweet crude to Europe in May, versus 1.6 million bpd in April, data from Kpler showed. In May 2024, the U.S. exported 1.7 million bpd of light, sweet crude, which is lighter in density and lower in sulfur content, to Europe.
While light crudes are typically easier for refineries to process, many global refineries have invested in upgrading capacity to run heavy-sour grades, which are usually cheaper and still yield sufficient quantities of higher-value fuels.
