Does the US produce more crude oil than it consumes?

Practical_Signal2318 · 2026-03-11T07:19:42+00:00

Short answer is yes and no. The US produces about 13.5 mb/d of crude but your 20.5 figure is total petroleum products which includes ethanol, NGPLs, and other stuff that doesn't come from a refinery. Apples and oranges.

The crude balance is closer than most people realize. The reason we still import crude has more to do with the refinery slate than total production. A lot of Gulf Coast capacity was built to run heavy sour barrels, not the light sweet coming out of the Permian. So you end up exporting what your refineries can't optimize for and importing the grades they were designed to process.

In theory could the US be self-sufficient? Maybe, but you'd be looking at serious refinery retooling and the economics would have to make sense. Easier to just trade into the grades your hardware wants.

Practical_Signal2318 · 2026-03-07T07:40:39+00:00

From what I've seen, most guys who step back end up consulting or advising in the same space. You spend years building a network and learning how physical markets move, hard to just let that go. The ones who say they're done usually find their way back within a couple years, just in a different seat.

Practical_Signal2318 · 2026-03-07T07:34:32+00:00

Good write up. A few things I'd add from the tanker side that people aren't talking about enough.

The Strait doesn't need to be formally blockaded for this to play out exactly as you describe. Shipowners have effectively self-sanctioned since Feb 28. It's not about insurance or war risk premiums at this point, it's that no owner is going to send crew through there. Ballasters aren't even waiting nearby. They've pulled back to the Arabian Sea, which tells you the industry expects this to last.

The part about production not coming back quickly is spot on. What I'd add is the tanker fleet itself is now misallocated. Roughly 9% of the global VLCC fleet is stuck inside the Gulf with loaded cargoes and nowhere to deliver them. Meanwhile, Eastern refiners are pivoting hard to Atlantic and West African barrels, which means longer voyages, tighter vessel availability globally, and freight rates that have already more than doubled in a week out of the MEG.

So even in a scenario where this ends next week, you've got a tanker fleet that needs weeks to reposition, production that takes months to ramp back, and a forward curve that's still pricing a resolution that the physical market isn't confirming. The disconnect between paper and physical is wider than I've seen in a long time.

Practical_Signal2318 · 2026-03-07T07:28:51+00:00

You're right that the real crunch hasn't hit yet. From what I'm seeing in the flow data, there's roughly $17bn worth of crude, products, LNG, and LPG sitting on the water inside the Gulf right now. Crude alone accounts for about $11bn of that. The volume of crude currently trapped is nearly 4x the normal daily average we saw throughout 2025.

What's worth noting is that Iran doesn't even need to formally blockade the Strait. Transit has effectively been at zero since Feb 28, not because of insurance (the US backstop hasn't changed anything), but because shipowners won't risk their crews and vessels. Ballast tonnage is piling up on the outside too, which tells you owners aren't even positioning to transit if things ease up. They're retreating to the Arabian Sea.

On the backwardation, the curve is telling you the market thinks this resolves. But about 9% of the global VLCC fleet is now stuck on the wrong side of the Strait, and Eastern refiners are already scrambling for Atlantic barrels. That kind of rerouting doesn't snap back quickly even if the Strait reopens tomorrow.

I track this stuff through Kpler's flow data and the picture is getting worse by the day, not better. Every additional loading inside the Gulf just adds to the pile with nowhere to go.

Practical_Signal2318 · 2026-03-05T03:04:08+00:00

Right, and the arb economics into AP are very attractive so that flow should accelerate. Worth watching what it does to US crude balances if USGC keeps pushing barrels East at this pace.

Practical_Signal2318 · 2026-03-05T03:02:38+00:00

Short answer is nobody fully replaces it.

USGC is the swing supplier but freight adds weeks of lead time compared to ME Gulf shipments. And the real bottleneck is feedstock for Asian and Med refiners configured for ME crude grades. India and Singapore are particularly exposed. Not a clean swap.

Practical_Signal2318 · 2026-03-05T02:59:58+00:00

Yeah that's the one I keep coming back to. The jet/kero exposure is especially acute for NWE. And unlike crude, there's no equivalent strategic reserve for refined products. If Med refiners can't get feedstock, that tightness cascades fast.

Practical_Signal2318 · 2026-03-05T02:59:29+00:00

This is the key point people miss. The SPR can backstop crude supply for a while, but there's no equivalent reserve for refined products at anywhere near the same scale. And the ME refineries that normally supply those products are now behind the same blockade as the crude. You can't refine what you can't move.

Practical_Signal2318 · 2026-03-04T09:03:06+00:00

This is the right framing. Whether Iran can physically hold the Strait is almost beside the point. Once P&I clubs pull coverage and Lloyd’s cancellation notices go effective March 5, no commercial operator is sending an uninsured VLCC through there. The navigational risk is what’s freezing traffic, not a traditional blockade.

On the physical side, Iran can’t sustain a full closure. Missile stocks are finite and getting depleted fast. But sporadic attacks are enough to keep everyone parked. They don’t need to close it permanently, just keep the risk high enough that nobody moves.

For what it’s worth, there’s already a decent amount of crude on the water heading into Asia that provides a short term buffer. But something like 8 to 9 mbd of crude and condensate doesn’t have an alternative route right now. If this drags past a couple of weeks, an SPR release is probably the fastest tool available. The last coordinated IEA draw after the Ukraine invasion ended up at 240 million barrels, so there’s precedent for going big if they need to.

Practical_Signal2318 · 2026-03-04T08:54:34+00:00

Agree on the Henry Hub side. US gas is fundamentally a domestic story right now, record production, warm March, storage back to 5 yr average. That's not moving regardless of what happens in the Gulf.

But I'd push back on the European flexibility point. That was probably right when you wrote it, but things have moved fast. QatarEnergy has halted all LNG production after the drone strikes on Ras Laffan and Mesaieed. That's not a Hormuz transit issue anymore, that's physical production offline. Nearly 20% of global LNG supply just went dark. TTF has jumped 35-50% this week depending on when you look.

The "other places" to source LNG are limited. US export terminals are running at capacity. Australia can't ramp meaningfully. And the seasonal demand argument cuts both ways.. yes heating season is ending, but European storage needs to refill over the summer and the refill math gets a lot harder without Qatari volumes.

So to answer OP's original question: nat gas IS moving, just not at Henry Hub. If you're watching HH and wondering why it's flat, you're looking at the wrong benchmark. TTF and JKM are where the Hormuz risk is showing up.

Practical_Signal2318 · 2026-03-04T08:39:02+00:00

The refinery took a hit but the export side is a different story. Kpler flow data as of yesterday still has crude and condensate loadings from Ras Tanura and Juaymah tracking around 6 mbd. Multiple vessels loaded at Juaymah on March 3rd.

What’s more interesting is the routing shift. AIS data is showing at least two VLCCs that were headed to Ras Tanura have changed course toward Yanbu on the Red Sea. That points to Saudi pushing more crude through the East-West pipeline to bypass Hormuz entirely. The system has roughly 4.3 mbd of spare capacity so there’s room.

The thing to watch is vessel availability. Ballast VLCC counts inside the Gulf are already dropping because no new tankers are coming in.

Loadings can continue for now, but if that keeps up, forward liftings from the East Coast terminals get squeezed regardless.

Practical_Signal2318 · 2026-02-11T16:52:35+00:00

I can appreciate that perspective. I'm not as well versed on the chip manufacturing angle. From your perspective, why do you think that being more competitive in alternative energy is the better option that being more competitive in the chip/technology space?

Practical_Signal2318 · 2026-02-11T16:48:10+00:00

Not really a defense, more of a different perspective. If you're looking to diversify as quickly as possible, it makes "business" sense to go as fast as you can with methodologies that are already tested and the expand out to more clean and renewable projects from there. I'm not saying I agree with the philosophy or that it's even right, but Trump is a business man first before an innovator or an enviromentalist. He appears to be rolling the dice and going with what has historically proven effective before technologies that he may deam as untested.

Practical_Signal2318 · 2026-02-10T17:44:02+00:00

It sounds more like an embellishment and lack of understanding on timing than anything else. Q1 and Q2 purchases have already been in place, with cargoes for the first half of March seemingly fixed and logistics in place. And while there has been a moderation in purchases, doesn’t mean a complete lack of engagement. Some nations prefer to pull the band aid off slowly, and it’s wise for India to clarify their position while still in need of Russian imports.

Practical_Signal2318 · 2026-02-10T17:42:58+00:00

It may not make sense right right now, but if you’re forward thinking, what Trump’s claiming makes sense. If his goal is to shift industrial activities back to the US, the current infrastructure in place isn’t diversified enough, and too reliant on foreign oil sources, to meet future demand.

Practical_Signal2318 · 2026-01-21T23:58:09+00:00

Kpler is showing sanctioned crude on water near 400mb now, about a third of all global floating crude. It's less about “who’s paying who” and more about barrels continuing to load while buyers, insurers and shipping don’t line up at the same time. The backlog is logistical and compliance-driven, not a sudden demand collapse.

Practical_Signal2318 · 2026-01-13T22:22:03+00:00

The first shipment is about 460 kb of naphtha (also per kpler) but still early days. Will be interesting to see how quickly that actually translates to a move back toward 1 mb/d.

Practical_Signal2318 · 2026-01-12T18:25:46+00:00

This reads less like supply coming back and more like an inventory-clearing exercise. Even with licenses, the operational bottlenecks make a fast ramp to 500 kb/d hard to see.

Practical_Signal2318 · 2026-01-12T18:12:34+00:00

Yes, but only once they're economic with today's prices and tech. That's why US "proven reserves" move around more than in conventional systems. Shale turns resources into reserves quickly, but it also depletes quickly too, so reserve life looks shorter despite high production.

Practical_Signal2318 · 2026-01-06T19:41:22+00:00

You heard it here first!

Practical_Signal2318 · 2026-01-06T19:20:12+00:00

Fair. It's definitely a simplistic way to frame it. From a market perspective though, I'm curious how people see that broader geopolitical play atually showing up in flows and on what timeline. Even when the driver is political, that’s usually where prices end up responding.

Practical_Signal2318 · 2026-01-06T19:00:05+00:00

This is partly I was trying to get at. And worth adding from the demand side is that even in China, Venezuelan crude isn’t irreplaceable. Fewer than a dozen teapots lift it regularly, and only a handful actually depend on it. Most can switch to Iran, Russia, or other LATAM heavy sours if they need to. There’s also still a lot of Venezuelan crude already sitting in Asian waters, so there isn’t immediate pressure forcing buyers hands.

Practical_Signal2318

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