Americas crude output surge lengthens global balances

Executive summary

Market & Trading calls

Americas:

• Neutral on US crude supply, which is expected to remain flat in the near term, despite disappointing weekly EIA data and a slight weakening in the US oil rig count.
• Bullish on Canadian crude supply as producers continue to ramp up production amid robust demand from the US and Asia, and tight WCS Hardisty differentials
• Bullish on Brazil's crude supply as recently commissioned (and upcoming) FPSOs ramp up production, keeping seaborne exports near record highs.

Europe and Africa:

• Bullish on West African crude differentials as Dangote relies increasingly on regional grades
• Bearish on Nigeria's imports of European gasoline as Dangote's output increases over H2 2025
• Bullish on South Sudanese Dar Blend exports since at least three 600 kbd cargoes have been tendered for May

Middle East - Asia - Russia:

• Bullish on China’s demand for Middle Eastern crude, driven by attractive OSPs and a wide Brent-Dubai spread
• Bearish on Iraqi crude exports to the Mediterranean, as shipping companies remain cautious about transiting the Suez Canal and robust Asian demand diverts cargoes eastward.
• Neutral on Indian and Pakistani crude flows, despite escalating military tensions that could potentially threaten oil shipments in the Arabian Sea.

Americas: America's crude supply has been rising over H1, keeping regional markets oversupplied

US crude supply came under pressure in the week ending May 2, with the EIA's weekly data showing US supply averaging a mere 13.37 Mbd, the lowest output since mid-January. This marks a decrease of 100 kbd from the average weekly levels observed in April and places production 200 kbd below the figures seen in March, when weekly production figures averaged a record high of 13.6 Mbd. The recent decline in the weekly production diverges from the EIA’s implied data, which has rebounded to the highs observed in March (see chart below). Our analysis aligns more closely with these implied figures, with our base case seeing US crude and condensate production averaging 13.5 Mbd since March, despite recent price declines.

While the US oil rig count reached a multi-week low of 479 for the week ending May 2, representing a decrease of 10 rigs from levels seen before "Donald Trump's liberation day," we expect US shale producers to increasingly focus on efficiency gains, limiting the downside to production in the near term. Exceptionally strong growth in New Mexico continues to offset declines in other basins such as the Bakken and Eagle Ford. Furthermore, non-shale supply from the Gulf of Mexico is poised to provide additional upside in the near term. Chevron’s "Ballmore" project, which commenced operations on April 20, is anticipated to support an upward trend in Gulf of Mexico supplies over the coming months, keeping US crude supply robust over the remainder of Q2.

US implied and reported crude and condensate supply, Mbd

Source: EIA

Alberta's oil production showed a strong performance in March, reaching 4.19 Mbd, according to the AER's latest official monthly figures. This output set a new record for the month of March and represented a significant month-on-month increase of 150 kbd (see chart below), though it remained below the peak levels observed in late 2024. While Alberta's conventional supply also attained a notable high of 570 kbd—a 20 kbd rise from February, fueled by an uptick in light crude supply—the primary driver of growth remains the province's oil sands. Oil sands production averaged 3.5 Mbd in March. This not only establishes a new record for the month but also surpasses year-ago figures by 100 kbd.

Despite a dip in crude prices that has tested the breakeven points for new developments, the outlook for Alberta's production remains positive. Regional producers are incentivized to continue ramping up supply, supported by exceptionally strong WCS crude differentials. These robust differentials are underpinned by tighter inventories in Western Canada, strong demand from US refiners in early 2025 (particularly noted ahead of "Donald Trump’s Liberal day"), and substantial flows to Asian markets via the newly expanded TMX pipeline. Illustrating TMX's impact, exports from Canada’s Westridge terminal, despite a marginal dip in early May, have averaged 500 kbd over the past two months—an increase of 100 kbd compared to prior months, with the vast majority of these flows going to Asian refiners.

Albertan oil sands supply by crude stream, Mbd

Source: AER

Brazil’s crude supply approached record levels in March, with official monthly data indicating output surpassing 3.6 Mbd, a mark achieved for only the third time. This robust performance was driven by record-high pre-salt supplies, which climbed to 2.9 Mbd—an increase of 150 kbd month-on-month—fueled by the ramp-up of several new Floating Production Storage and Offloading units (FPSOs) in late 2024 and early 2025.

The surge in production translated into higher export availability, with Brazil’s crude flows reaching an unprecedented 2.1 Mbd in April. This export growth is partly supported by an anticipated decline in domestic refinery throughput, which is forecast to decrease by 50 kbd month-on-month to average near 1.9 Mbd in May. The outlook for Brazilian production remains positive, as the continued ramp-up of newly commissioned FPSOs, along with upcoming projects, is expected to keep output on an upward trajectory.

Favorable West-to-East arbitrage opportunities have underpinned strong crude exports to Asia, averaging 1.1−1.2 Mbd over the last three months. However, a recent widening of the Brent-Dubai Exchange of Futures for Swaps (EFS), coupled with the anticipated unwinding of OPEC+ production cuts—with our base case projecting an additional accelerated unwinding in July—is likely to prompt Asian refiners to source barrels more regionally. Consequently, this could lead to a reshuffling of Brazil’s crude flows in the months ahead, with a greater proportion directed towards European destinations.

Brazil's crude and condensate supply, Mbd

Source: ANP

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• Executive Summary
• Americas: America's crude supply has been rising over H1, keeping regional markets oversupplied
• Atlantic Basin: Stable runs at Nigeria's Dangote refinery in Q2 2025
• Middle East and Asia: Saudi OSP hike sparks optimism for Asian demand

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