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With Iran squeezed out, U.S. oil takes on new rivals in Europe

Reuters  |  MOSCOW/NEW YORK 

By and Devika Kumar

MOSCOW/NEW YORK (Reuters) - When the global trading industry gathered for its biggest annual meeting in in September last year, U.S. producing companies came well prepared.

U.S. giant and European rival prepared brochures for buyers detailing various U.S. crude grades and why they were suitable to replace part of Asia's long-standing supplies from the Middle East, and

As the gathers in this month for the annual IP Week, U.S. crude producers may have every reason to toast the success of their campaign in Europe, as well as

Only a few years ago, before the hydro-fracking and shale revolution overturned the economics of U.S. oil production, the was the world's largest by far and prohibited exports of oil by law.

Now shipments of U.S. crude into have just hit a new record. January imports were 630,000 barrels per day, still - behind and but above other OPEC producers including and

Higher U.S. crude exports have been helped by lower supplies of Iranian and Venezuelan crude, which has put under sanctions, scaring buyers across the world.

In the whole of 2018, U.S. supplies to doubled to 430,000 bpd, according to Refinitiv Eikon flows data. That represented 6 percent of overall imports or equal to the levels of Iranian to before the imposed fresh sanctions on

"U.S. crude is a real headache. It puts a lot of pressure on regional light grades. In fact, prices for all grades are affected because it is such a significant extra supply," said a with a European selling Russian oil.

Pressure will likely only increase as for 2019 U.S. is expected to average 12.06 million bpd, up 1.18 million bpd from last year, according to

Future predictions say the could produce as much as 15 million bpd of crude and up to 20 million bpd of total oil liquids, giving it complete self-sufficiency as it would fully cover its consumption of 18-19 million bpd.

Booming U.S. production has prompted OPEC and non-OPEC producers like to slash output by 3-4 percent since 2017 to prop up prices. The pact has helped double prices to $60 per barrel but at the expense of a market share loss to U.S. firms.

"Welcome to the free market," said a of an international trading firm. "Local producers either need to drop their pricing to compete or find other markets".

Competition is particularly acute in northwest Europe, where Britain and the imported 6.5 and 5.1 million tonnes of U.S. crude in 2018 respectively.

BP, Litasco, Equinor, Total and were among the main buyers in the Baltic replacing barrels with U.S. grades, traders say.

"WTI is the new dated Brent," said a senior crude referring to the U.S and European benchmarks.

takes U.S. oil to its in while Poland's said in January it would cut Russia's purchases from Kremlin oil by 30 percent and partially replace it with U.S. barrels. In Britain, the main U.S. are and Exxon Mobil, traders said.

In the Mediterranean, buyers of U.S. barrels - Italy, Spain, - tend to use them to replace light Caspian CPC Blend, Russia's and Iranian oil, traders said.

Greece's added WTI to its list of preferred crude options alongside and CPC as did Turkey's In Italy, U.S. oil flows to and the

WTI was by far the most popular U.S. grade among European buyers in 2018, followed by Midland Eagle Ford, Bakken and Mars.

As the world moves to tighter marine fuel regulations, which will increase demand for light barrels, demand for U.S. oil - which is predominantly light - will only rise.

"I expect U.S. crude to become even more popular in Europe. It seems that whatever is happening to these days, the U.S. benefits," said a trader with large European

(Editing by Vladimir Soldatkin, and David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, February 11 2019. 17:37 IST