In the midst of one of the most complex global energy crises, the United States has emerged as a pivotal player in the global oil market, benefiting from the shale oil revolution that changed the energy map during the last decade. Thanks to horizontal drilling and hydraulic fracturing techniques, America has transformed from the largest importer of oil to the largest producer of oil and natural gas in the world, and its oil exports have risen to 5.9 million barrels per day in recent weeks.

Only ten years ago, the United States was importing more than 5 million barrels per day to meet its domestic needs, but today it is pumping record quantities to global markets, in an attempt to compensate for supply disruptions resulting from the war between the United States and Iran and the closure of the Strait of Hormuz.

During the last four weeks, US exports of oil and refined products rose to about 5.9 million barrels per day, compared to 3.3 million barrels per day just one year ago, an increase of 2.6 million barrels per day, making US oil one of the most important sources of compensation for the global shortage in supplies.

But the American role was not limited to increasing production only, as the administration of President Donald Trump resorted to using the US Strategic Petroleum Reserve, known as “SPR,” as a main tool to calm the markets.

In March, Washington agreed to pump 172 million barrels of strategic reserve as part of an international operation coordinated with major industrial countries. After a slow start, the withdrawal rate rose sharply during May, exceeding 1.23 million barrels per day, the highest weekly level in the history of the US Strategic Reserve.

This large flow surprised markets and experts alike, especially since previous estimates indicated the difficulty of exceeding the level of one million barrels per day of continuous withdrawal.

Low pricing premiums
As US supplies increased, global price differences began to decline significantly. The premium for US West Texas Intermediate crude (WTI) shrank to only $1.5, while it was trading at a historical premium of $22.8 over Brent crude.

The cost of American oil arriving in Europe has also declined significantly, as the price of a barrel arriving at European ports fell from about $160 a month ago to about $106 now, with American shipments flowing to ports in the Netherlands, Italy, and Turkey.

Despite this major role, questions are increasing about the ability of the United States to continue this rhythm for a long period, especially since the strategic reserve is not a permanent source of supplies.

Declining strategic stock levels
As the intensive drawdown continued, fears began to rise about the decline in strategic stock levels and the increasing pressure on commercial stocks belonging to private companies, at a time when the White House was racing against time to reach an understanding with Iran that would alleviate the severity of the crisis.

It is estimated that the United States may be able to maintain current pumping rates until the end of May or perhaps June, but the markets may return to a state of anxiety again if the geopolitical crisis continues and an agreement that guarantees the stability of global supplies is faltered.