War and Asian demand helped U.S. refined product exports set a record

March 20 (UPI) -- Already supported by increased global demand, geopolitical conflict in Europe last year helped the United States set a record in exports for refined petroleum products, Energy Department data show.

The United States is a major oil and natural gas producer that's expected to take the lead this year in exports of liquefied natural gas, a commodity that's supporting energy security in a European economy still looking for alternatives to Russian supplies.

The outbreak of war in February 2022 prompted Western powers to impose sanctions on Russia, leaving a void in the market. The U.S. Energy Information Administration, the statistical arm of the Energy Department, said the higher prices that resulted from the war, as well as sanctions imposed on Russia, was an incentive to increase production.

Last year, the United States set a record in exports of refined petroleum products, which range from diesel to gasoline and propane. Data show total exports averaged 5.97 million barrels per day last year, a 7% increase from the prior year. Distillate fuel oil, a product category that includes diesel, accounted for 18% of the total increase.

Supplies were at a premium for much of 2022 as markets adjusted to the loss of Russian products. Total domestic distillate inventories even by late last year were a good 20% below average as more and more product went to the European market.

But trends were already supporting increased exports of domestically sourced goods. Total product exports last year were double the rate from 2010.

"Propane and other HGLs (hydrocarbon gas liquids) exports are directed primarily to the Asia Pacific region, accounting for more than half of total U.S. propane exports," EIA stated. "Japan received the most U.S. propane exports in 2022 at 384,000 barrels per day."

Recent data show markets are recalibrating more than a year after the invasion. Data for the seven-day period ending March 10 show distillate fuel inventories remain suppressed, but are only now around 8% below average. Propane storage levels are 42% higher than the five-year average for this time of year.

The overall situation could be supported with the launch of new domestic refinery activity. ExxonMobil last week said it started production at an expansion to its Beaumont refinery in Texas, which processes crude oil into diesel, gasoline and jet fuel

"The new crude unit enables us to produce even more transportation fuels at a time when demand is surging," said Karen McKee, the president of ExxonMobil product solutions division.