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US crude oil imports from Africa

Hydrocarbon Engineering,

For the first quarter of this year, African crude oil exports to the US averaged 170 000 bpd as rapidly rising US crude production has reduced domestic refiner’s demand for imported light sweet crude oil. Historically, US refiners have been major consumers of African crude oil, primarily from Nigeria, Algeria and Angola, with the US importing approximately a quarter of African crude exports in 2010. African exports to other global regions reflect both changes in exports to the US and the repeated and extended disruptions in Libyan production that have occurred since 2011. African crude that until recently flowed to the US has been diverted to serve European markets that have historically been served by Libya and to supply increased demand in Asian markets where, despite Libyan disruptions, deliveries of African crude have increased.

Importers of African crude

Historically, European refiners have imported substantial volumes of light sweet crude oil from Africa, including over three quarters of Libyan exports. As most Libyan crude is off the market, exports to Europe from the rest of Africa have increased by more than 700 00 bpd from 2010. European imports of crude oil from Africa have also increased to offset the 900 000 bpd decline in North Sea crude oil production since 2010. As a result, total European imports of African crude in 2014 have fallen by only 100 000 bpd since 2014.

Since 2010, African crude exports to Asia have increased by more than 200 000 bpd. So far this year, exports to Asia from African countries other than Libya have increased by 400 00 bpd compared to 2010 levels, more than offsetting the decline in Libyan supply to Asia. Higher refinery runs to satisfy growing regional petroleum product demand have increased crude flows to Asia.

China imported over 1.2 million bpd of crude oil from Africa during the first four months of this year, 22% of total African crude exports, and is now the world’s largest importer of African crude oil. Growth in demand for oil products and the expansion of Chinese refining capacity, which increased by 900 000 bpd in 2013 and is expected to increase by an additional 500 00 bpd in 2014, have driven rising Chinese demand for crude oil imports.

Future import levels

As US crude production is expected to increase by an additional 1 million bpd this year, it is likely that US imports of African crude oil will remain low compared to historic levels. However, refiner crude selection decisions are based on relative crude economics, and US refiners could import additional African crude oil should the economics of African crude streams become more favourable.

The level of demand for African crudes from Europe also looks uncertain. EIA’s May Short Term Energy Outlook has forecast European demand to fall in 2014 and stagnate next year, which would limit European refiners’ demand for crude. Perhaps the most important question surrounding the flow of African crude oil to global markets in how global oil trade flows would accommodate the return of substantial Libyan exports. Such production would likely displace current European demand for crude from other African producers. Under such circumstances, Asian markets, which together with the Middle East are expected to account for much of the expected growth in global oil demand, would likely be an increasingly important outlet for African light sweet crudes.

Adapted from a press release by Claira Lloyd.

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