U.S. gross crude oil imports increased by 528,000 barrels per day (b/d), or 7%, during the first half of 2016 compared to the first half of 2015. This increase reverses a multiyear trend of decreasing U.S. crude oil imports as a result of increasing U.S. production.
Imports from Nigeria, Iraq, and other members of the Organization of the Petroleum Exporting Countries (OPEC) rose by 504,000 b/d. Declining imports from Mexico, which fell 118,000 b/d, more than offset the increase in imports from Canada, limiting the net change in imports from non-OPEC countries to an increase of less than 24,000 b/d.
Changes in crude oil price spreads were a significant factor in the rise of U.S. oil imports during the first half of 2016. The narrowing price differences between U.S. crudes and international benchmarks provided an incentive for increased imports by refiners in areas where imported crudes now had a delivered cost advantage relative to similar domestic crudes. Additionally, lower overall crude prices contributed to a decline in U.S. crude production from an average of 9.5 million b/d in the first half of 2015 to 9.0 million b/d in the first half of 2016, resulting in higher net crude oil imports.
As a result of shifting price, supply, and logistical dynamics, East Coast (defined as Petroleum Administration for Defense District, or PADD, 1) crude imports rose by 244,000 b/d (41%) in the first half of 2016 compared to the same period in 2015, nearly three-quarters of which were supplied by Nigeria. Nigerian production actually declined during the first half of 2016 as a result of elevated supply disruptions. However, falling U.S. production and increasing competitiveness for seaborne light sweet crudes into the East Coast more than offset lower production levels, enabling imports from Nigeria to displace crude oil received from the Midwest (PADD 2).
In the Midwest (PADD 2), crude imports rose by 104,000 b/d (5%) during the first half of 2016 compared with the same time last year. Canada accounted for almost all of the increase despite wildfires in Alberta that disrupted production later in the second quarter. Canada is the largest source of crude oil imported into the United States, and its heavy crude is particularly well suited for U.S. refiners in the Midwest and Gulf Coast.
Gulf Coast (PADD 3) imports increased 88,000 b/d (3%), with rising imports from Middle East and African countries offsetting declines from Latin America. Imports from Iraq increased by 142,000 b/d, more than the next four countries combined. Iraq’s production in 2015 rose by 700,000 b/d, enabling more of their production to be exported to the United States.
The Rocky Mountain region (PADD 4) is the only region with declining imports during the first half of 2016, with volumes down by 24,000 b/d (9%). PADD 4 is relatively isolated from import infrastructure compared with other regions, and imports have been entirely sourced from Canada for more than a decade, a trend that continued during the first half of 2016.
Imports to the West Coast (PADD 5) rose by 116,000 b/d (11%). Saudi Arabia, Canada, and Ecuador are the top three sources of West Coast crude imports, accounting for about two-thirds of crude oil imports into the region and about 86% of the region’s import growth during the first half of 2016.
Although EIA’s Short-Term Energy Outlook does not forecast gross crude oil imports, EIA expects annual imports of crude oil on a net basis to increase in both 2016 and 2017.