U.S. Energy Output Cushions Global Supply Shock From Hormuz Closure
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Record U.S. oil production and exports have helped cushion the global supply shock from the closure of the Strait of Hormuz, the American Petroleum Institute said this week. U.S. crude and product inventories have fallen below the five-year average, tightening the domestic market even as refineries run at high utilization rates.
Record U.S. Supply
U.S. crude oil and product exports have surged to record levels, fundamentally reshaping America’s role in global energy markets, according to API. The industry has invested roughly $150 billion annually in upstream production alone since the shale revolution, with billions more in pipelines and export terminals. U.S. crude output is now at an all-time high, helping offset the loss of Middle Eastern supplies after the Strait of Hormuz was closed to traffic.
Tight Domestic Market
Record exports are rapidly depleting U.S. inventories. Middle distillate stocks are 12% below the five-year average per the latest EIA report. The national average gasoline price has climbed to $4 per gallon, about $1 above pre-war levels and nearly $0.90 higher than a year ago. The surge in crude prices since the bombing of Iran began in late February has persisted, even as the U.S. energy system cushions the blow.
What's Next
API warns that markets remain tight and uncertainty around key shipping lanes persists. The path to a permanent de-escalation in the Middle East remains unclear, leaving U.S. inventories vulnerable to further strain.
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U.S. Energy Output Cushions Global Supply Shock From Hormuz Closure
