The world is making a run on U.S. energy, setting American motorists and foreign buyers on a collision course.
President Trump and his administration have successfully talked down and taken measures to contain American energy prices. That, combined with the fact that the country has a huge surplus, has prompted overseas buyers to buy huge volumes of U.S. oil, gasoline, jet fuel and other products they aren’t getting from the Middle East. U.S. oil prices settled Friday at $105.42 a barrel, down more than $7 from last month’s high.
For now, the U.S. has been able to meet needs at home and replace some of the missing Gulf barrels. No nation in the world’s history has ever exported as much energy: It shipped 14.2 million barrels of crude and products a day late last month—the rough equivalent of one out of seven barrels consumed globally in ordinary times.
The U.S. exported 2.7 million barrels of U.S. diesel, gasoline and other refined products to Australia in March, according to Kpler. Before the war broke out, exports there had been sporadic. An additional 1.8 million barrels headed to Australia in April.
Rick Hessling, Marathon Petroleum’s chief commercial officer, told analysts earlier this month that the company’s Los Angeles refinery has sent diesel to Australia for the first time, and that the firm has also moved naphtha, a petrochemical used in paints and inks, to Asia—also a first.
“We really were creative and made some unique movements on the export class of trade this past quarter,” he said.
These foreign buyers are helping push prices higher in the state. A gallon of diesel cost $7.42 on average in California on Sunday, up from $5.10 before the war.
It isn’t just transportation fuels that are bleeding out of the U.S. Tankers have swarmed the Gulf Coast to load up on crude. Commercial crude stocks excluding the Strategic Petroleum Reserve fell by 4.3 million barrels in the week ended May 8, according to the EIA. At Cushing, Okla., one of the world’s largest oil-storage facilities, where the U.S. benchmark for oil is set, stocks could fall to levels that complicate operations within the next two months, some analysts say.
If that happens, U.S. oil prices will have to jump to discourage more draws. Crucially, the oil benchmark would likely creep higher than global oil prices, which would discourage foreign buyers, depress exports and make more crude available to domestic markets.
“What you’re seeing is a liquidation of inventory,” said Andy Lipow, president of Lipow Oil Associates in Houston. “The world has been doing it for two months.”
Write to Benoît Morenne at benoit.morenne@wsj.com