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Data shows that US oil exports fell to the lowest level since eight months in July.

Ship?tracking data revealed that U.S. crude oil exports fell to 3,66 million barrels a day in July, the lowest in eight months. A short-lived?peace?deal' between the U.S. & Iran in June temporarily flooded the markets with?Middle Eastern crude and reduced demand for American oil abroad. After the Iran War, which cut Middle Eastern oil supplies and forced Asian and European nations to look to the U.S. for the rest of the year's supply, the U.S. surpassed Saudi Arabia as the top oil exporter. In May, U.S. oil exports reached a record monthly level of 5.7 million barrels per day. Since then, however, the decline has been steady. In June, a memorandum signed by Washington and Tehran allowed stuck tankers to pass through the Strait of Hormuz. This helped to increase oil supply on the market. During the period of the peace agreement, the number of tankers leaving the Strait?of Hormuz in a single day reached 42. U.S. oil exports into?Asia fell to 40% in July, down from 52% in the previous month. Top buyers such as Japan and South Korea took fewer shipments. Cargoes for Japan, which was the largest buyer of oil in June and in July, dropped?67% in July to 324,000 barrels per day from a high in May. Shipments to South Korea also fell 39%, to 474,000 barrels per day. The number of shipments to Europe fell to 1.7 million bpd from 2.5 million bpd as recently as May. The U.S. government released crude oil from its Strategic Petroleum Reserve in July, but exports slowed to just 31,000 barrels per day. Kpler data indicated that the two shipments were headed to France and Peru.

Rohit Rathod is an analyst with Vortexa. He said that the high refinery utilization in the U.S. kept barrels from being exported. According to the U.S. Energy Information Administration's data, the four-week average U.S. refining utilization rate was 96.3%. This is the highest level since 2018. The input of crude oil into U.S. refineries has also reached its highest level for about seven years.

EXPORTS TO SOAR IN AUGUST & SEPTEMBER

The discount between U.S. West Texas Intermediate and Brent crude, traded globally, also shrank significantly in June. This is when most deals are made for July shipments, which further hurts exports. WTI's average discount to Brent was $4.17, down from $8.16 per barrel in May. When WTI becomes cheaper than Brent, more U.S. exports are encouraged. Analysts said that the spread between WTI and Brent has been widening more recently. WTI traded at a discount as high as $5.42 per barrel in July. This should encourage exports to August and September. Scott Shelton, an energy specialist with TP ICAP, says that ship fixtures to exports from the U.S. Gulf Coast have been extremely busy in the past few days. A larger-than-normal number of Very Large Crude Carriers were booked for Asia and Europe, and Aframax tanks as well. A Very Large Crude Carrier is capable of moving up to 2 million barrels. Aframax tanks can transport about 750,000 barrels.

Shelton said: "U.S. crude exports are on the rise." Vortexa's Rathod stated that export volumes are expected to surpass 4 million barrels a day in August and in September, but they will not reach the 5 million bpd levels seen in April or May. According to Energy?Aspects, exports are expected to be 4.58 million bpd for August and 4.45 million bpd for September.

Ben Cook, portfolio director of the Hennessy Transition Energy Fund, says that the U.S. may be asked to increase exports if the conflict escalates in the Middle East. Analysts and traders have stated that the U.S. only has a monthly capacity of 6 million bpd due to limited pipeline capacity, vessel accessibility and loading schedules. Reporting by Arathy S. Somasekhar, in Houston; Siddharth C. Cavale, in New York. Editing by Nathan Crooks & Paul Simao.

(source: Reuters)