By Benoît Morenne
The world is making a run on U.S. energy, setting American motorists and foreign buyers on a collision course.
President Trump and his administration have successfully talked down and taken measures to contain American energy prices. That, combined with the fact that the country has a huge surplus, has prompted overseas buyers to buy huge volumes of U.S. oil, gasoline, jet fuel and other products they aren't getting from the Middle East. U.S. oil prices settled Friday at $105.42 a barrel, down more than $7 from last month's high.
For now, the U.S. has been able to meet needs at home and replace some of the missing Gulf barrels. No nation in the world's history has ever exported as much energy: It shipped 14.2 million barrels of crude and products a day late last month -- the rough equivalent of one out of seven barrels consumed globally in ordinary times.
But trouble is brewing. U.S. oil producers are barely stepping up their output, refineries are running at full-throttle, and domestic stocks are getting depleted fast. The upshot: American consumers are set to keep paying more for fuel to stay inside the U.S.'s borders.
"This is all just going to end so badly," said Matt Smith, director of commodity research at commodities- and shipping-data provider Kpler. "We have to essentially get squeezed to the point where prices move higher to stop the barrels leaving."
The Trump administration is trying to tamp down rising prices, including by waiving restrictions on trade between U.S. ports and releasing oil from strategic stockpiles. Trump said last week he supports suspending the federal gasoline tax. Gasoline prices nationally averaged $4.51 a gallon on Sunday and could keep climbing into Memorial Day weekend, the starting gun to the busy summer driving season.
The administration has said it wouldn't impose a ban on energy exports. Energy Secretary Chris Wright said on CNBC last week that the U.S.'s economic future depends on selling its energy abroad and that this was a top item on the Trump agenda.
"We can't be a major energy exporter to the world if we decide sometimes to stop exporting our energy," he said.
For now, the scramble is testing the limits of America's energy system. Barrels are popping up in unexpected places as refiners seek outlets to funnel barrels to international markets.
The ports of New York, Philadelphia and Albany, N.Y., exported 174,000 barrels a day of gasoline, diesel and other petroleum products last month, according to Kpler. That is 10 times the volumes they shipped over the same period last year. Halfway through May, the pace of exports is even higher, well over 200,000 barrels a day -- the highest monthly pace on Kpler's records since 2017.
The red-hot exports from that region are a sign that refiners on the Gulf Coast are likely running out of dock capacity at loading terminals, said Brian Stetter, director of Americas fuels and refining at S&P Global. It appears companies are sending their barrels up the Colonial Pipeline, a major conduit that transports about 45% of all fuel consumed on the East Coast, he said.
"The East Coast is short, but the market is seeing regions that are even tighter and more shorter, and that's why we're seeing these very unusual trade flows," Stetter said.
These barrels so far this month are predominantly heading to Europe, including France, Belgium, the Netherlands and the U.K., Kpler's Smith said. Analysts say that is a sign that a shortage of refined products has spread from Asia to Europe.
Diesel has been in especially high demand. The U.S. exported some 1.86 million barrels at one point earlier this month, according to the Energy Information Administration, the highest volume ever. The swelling shipments have brought stocks of diesel and other fuels on the Gulf Coast down by nearly 19% from prewar levels, according to the EIA.
American refiners including Marathon Petroleum and Valero say they are cranking out diesel to the hilt. Companies are shipping the fuel to countries that have typically relied on Asia for supplies, such as Australia, whose top supplier before the Iran war had been South Korea. That country can't access nearly as much Middle Eastern crude to process into diesel as it did before.
The U.S. exported 2.7 million barrels of U.S. diesel, gasoline and other refined products to Australia in March, according to Kpler. Before the war broke out, exports there had been sporadic. An additional 1.8 million barrels headed to Australia in April.
Rick Hessling, Marathon Petroleum's chief commercial officer, told analysts earlier this month that the company's Los Angeles refinery has sent diesel to Australia for the first time, and that the firm has also moved naphtha, a petrochemical used in paints and inks, to Asia -- also a first.
"We really were creative and made some unique movements on the export class of trade this past quarter," he said.
These foreign buyers are helping push prices higher in the state. A gallon of diesel cost $7.42 on average in California on Sunday, up from $5.10 before the war.
It isn't just transportation fuels that are bleeding out of the U.S. Tankers have swarmed the Gulf Coast to load up on crude. Commercial crude stocks excluding the Strategic Petroleum Reserve fell by 4.3 million barrels in the week ended May 8, according to the EIA. At Cushing, Okla., one of the world's largest oil-storage facilities, where the U.S. benchmark for oil is set, stocks could fall to levels that complicate operations within the next two months, some analysts say.
If that happens, U.S. oil prices will have to jump to discourage more draws. Crucially, the oil benchmark would likely creep higher than global oil prices, which would discourage foreign buyers, depress exports and make more crude available to domestic markets.
"What you're seeing is a liquidation of inventory," said Andy Lipow, president of Lipow Oil Associates in Houston. "The world has been doing it for two months."
Write to Benoît Morenne at benoit.morenne@wsj.com
(END) Dow Jones Newswires
May 17, 2026 22:00 ET (02:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments