The U.S. remains a net importer, but its demand for foreign oil has fallen by 32 percent since its peak in 2005.
Meanwhile, plummeting oil and gas prices, driven in part by the U.S. shale revolution, have already eroded OPEC and Russia’s abilities to use natural resources as foreign policy cudgels. They are also squeezing petroleum-rich economies from Venezuela to Nigeria that rely heavily on crude receipts to fund everything from military budgets to fuel subsidies.
"A prolonged period of low gas and oil prices will put heavy pressure on Russia in its relations with the West and of course low energy prices puts tremendous strain on all exporters of hydrocarbons worldwide, on their government budgets," said Ted Michael, an analyst at Genscape Inc., an energy-market data and intelligence firm.
Second Vessel
The Theo T was joined shortly after its trailblazing journey by a second ship out of Houston destined for the Netherlands. How many tankers have sailed since won’t be known until comprehensive data on January’s shipments is released by the U.S. Census Bureau in the coming weeks.
Trafigura Group Pte Ltd. also sold West Texas Intermediate oil to a refinery in Israel, Ben Luckock, global head of crude oil at the commodity trader, said on Monday by e-mail. The 700,000 barrel cargo of U.S. benchmark crude will be delivered in March.
What’s already clear is that even with crude losing 70 percent of its value since the middle of 2014 amid a worldwide production glut and a slowdown in Chinese demand growth, buyers are happy for the chance to diversify their sources of supply.
Choosing the U.S.
“If you’re a buyer in, say, South Korea, and you’re offered the same price from Saudi Arabia, Russia and the U.S., you’re going to make the obvious choice: the U.S.,” Mills said. “It’s the one supplier you know is never going to threaten you or cut off supplies, which is certainly not the case with Saudi Arabia, Russia or Iran.”
A similar story is beginning to unfold in natural gas, where U.S. production also has multiplied in recent years as a result of advances in shale extraction.
U.S. companies, led by Cheniere, have been spending billions of dollars on LNG export complexes where the fuel is cooled to minus 256 degrees Fahrenheit (minus 160 Celsius) to shrink it to 1/600th its volume so it can be shipped aboard ocean-going tankers. As a result, an international gas market is emerging akin to the long-established one for the more readily transportable crude oil.
LNG Exports
Houston-based Cheniere plans to begin LNG exports within weeks, after missing a January target because of faulty wiring. The first tanker that will carry LNG from Cheniere’s Sabine Pass terminal in Louisiana has arrived. Asia Vision has moored at Sabine Pass, according to ship-tracking data compiled by Bloomberg.
U.S. LNG cargoes, in combination with a bevy of new gas projects in Australia, will probably add 15 billion cubic feet of daily supply to global markets in the next few years, Genscape’s Michael said. That would be a 43 percent addition to the 35 billion currently bought and sold internationally.
"We will definitely replace Russia as the lowest-cost supplier,” Fadel Gheit, an analyst at Oppenheimer & Co., said of the U.S. expansion. “All of these things will have geopolitical and economic consequences. It’s a win-win for the U.S. and the West.”