US oil floods Europe, hurting OPEC and Russia

April 23, 2018 – Reuters reports today that “As OPEC’s efforts to balance the oil market bear fruit, US producers are reaping the benefits – and flooding Europe with a record amount of crude.

Deep Sea oil Well

Russia paired with the Organization of the Petroleum Exporting Countries last year in cutting oil output jointly by 1.8 million barrels per day (bpd), a deal they say has largely rebalanced the market and one that has helped elevate benchmark Brent prices (LCOc1) close to four-year highs.

Now, the relatively high prices brought about by that pact, coupled with surging US output, are making it harder to sell Russian, Nigerian and other oil grades in Europe, traders said.

“US oil is on offer everywhere,” said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing US oil. “It puts local grades under a lot of pressure.”

US oil output is expected to hit 10.7 million bpd this year, rivaling that of top producers Russia and Saudi Arabia.

In April, US supplies to Europe are set to reach an all-time high of roughly 550,000 bpd (around 2.2 million tons), according to the Thomson Reuters Eikon trade flows monitor.”

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