July 11, 2022 [MARKETS INSIDER] – More than 5 million barrels of oil from the US Strategic Petroleum Reserve were exported to Asia and Europe last month, Reuters first reported.

Among the shipments were two cargo ships carrying 560,000 barrels each from Atlantic Trading & Marketing, part of France’s TotalEnergies, according to Reuters. And Phillips 66, the fourth-largest oil supplier in the US, sent about 470,000 barrels from a storage facility in Texas to Trieste, Italy, where a pipeline feeds refineries in central Europe.

The exports follow similar shipments of Strategic Petroleum Reserve crude in April, when three ships went to Europe to replace Russian oil.

Overall, US oil exports have been surging since Russia invaded Ukraine in February as Western countries and companies turn away from Russian supplies.

While gas prices typically follow oil prices, which are set by global markets, US refineries have been a key bottleneck. Because of earlier shutdowns and limited investment in recent years, capacity has shrunk and refineries have been running nearly at full tilt.

With little extra scope for refining more volumes of fuel, additional supplies of crude, including from the Strategic Petroleum Reserve, have been going overseas. In fact, oil exports from the US Gulf Coast hit a record rate in the second quarter, according to Rystad Energy.

The Biden administration has been releasing oil from the Strategic Petroleum Reserve to try to lower fuel prices. Releases are at a record pace of roughly 1 million barrels a day, bringing the stockpile to the lowest level since 1986 in June.

Early last month, the average gallon of gas in the US climbed to a record high of $5. Gas prices have been coming down for the past three weeks, though they remain elevated. And oil prices have fallen amid fears of a
recession and the rising dollar.

“Crude and fuel prices would likely be higher if [the SPR releases] hadn’t happened, but at the same time, it isn’t really having the effect that was assumed,” Matt Smith, a Kpler oil analyst, told Reuters.

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