Stephanie Kelly and Arathy Smasekhar

HOUSTON (Reuters). Despite the loss in Russian oil expected, exports to Europe rose between March and April according to analysts and traders.

While the European Union considers imposing an oil embargo upon Russia in response to the invasion of Ukraine, U.S. oil exporters increase shipments to Europe of U.S. light oil. Washington’s decision of releasing 180 million barrels oil from its Strategic Petroleum Reserve is helping to flood the domestic market.

According to Matt Smith (lead oil analyst for Americas, data provider Kpler), U.S. crude oils exported for Europe have risen to close 1.5 million barrels per daily (bpd) since April. This is the most in two years, and the strongest month on record. He said that most cargoes were carrying lighter sweet grades and headed for European destinations such as Spain, Denmark, England, and Italy.

Oil prices at over $100 per barrel are driving up production in the Permian Basin, America’s largest shale area. According to Energy Information Administration, output is expected to reach a new record of 5.1 million barrels per day next month. According to traders, U.S. Gulf Coast refiners are more inclined to use heavy sour grades and leave most of the lighter crudes for export.

Vortexa chief economist David Wech stated that “with a few refiners currently shunning Russian crude, it is adding to their demand for U.S. oil crude.” He said that light sweet crudes can be processed by simpler refineries which often helps them to offset their higher processing costs.

Russia is Europe’s top oil supplier. In 2020 it provided just more than a quarter of its imports, according to Eurostat.

SWEET FLAVOR

The March shipment of U.S. crude to Europe was at least 65%. This is 63% more than the previous month. These cargoes carried around 22 million barrels in total, with most being priced at the Magellan East Houston terminal.

According to a source of information familiar with European markets, “Europeans are searching for alternatives supplies and the U.S. can be a useful market for bringing light sweet grades into Western and Eastern European countries.”

British oil refineries bought last month the biggest amount of U.S. crude oil in the past two-and-a half years. They plan to eliminate Russian oil imports by year’s end, Eikon data revealed.

The majority of cargoes consisted U.S. light sugar oil with at least a quarter delivering Midland Crude, according to U.S. Customs Data, which breaks down the source grades.

The record-breaking 7 million barrels of U.S. crude will be imported by Spain in April according to cargo track data. It follows a peak of 6 million barrels in March for several refiners, including Repsol, Cepsa, BP (NYSE):

Repsol, Cepsa or BP have not yet responded to comment requests.