US energy exports are soaring thanks to the war in the Middle East. While that’s boosting energy sector profits – and stock prices – it’s also increasing price pressures here at home.
Check out the MoneyShow Chart of the Day, which shows the four-week moving average of US crude oil exports. They’ve been surging lately, hitting 5.37 million barrels per day in the most recent week from 3.76 million in the same week a year earlier. Exports of refined products like diesel are also rising fast as customers in Europe and Asia look for new supplies to replace what they used to get from the Middle East.
US Crude Oil Exports (4-Week Average)
Source: MacroMicro
As the Wall Street Journal noted, the US is now supplying around one out of every seven barrels of oil needed globally. Energy companies are reaping the benefits here, with sector earnings expected to soar a whopping 110% in the second quarter, according to FactSet. That’s roughly double the 54.6% growth expected for the next-closest sector, information technology. It’s also a key reason the State Street Energy Select Sector SPDR ETF (XLE) is up 32.9% year-to-date.
But as more crude oil and refined products flow overseas versus stay in the domestic market, the price of energy products here at home will rise. In the words of a Kpler analyst quoted in the Journal: “We have to essentially get squeezed to the point where prices move higher to stop the barrels leaving.”
Bottom line? US yields are already rising. US inflation readings are already rising. And until the global energy supply situation stabilizes, those trends are likely to continue.
