The U.S. has become the biggest exporter of oil to the U.K. for the first time since the Suez crisis, as the growing bounty of shale production starts to supplant North Sea supplies.

In January, the U.S. supplied the equivalent of almost one in every four barrels of crude processed by U.K. oil refineries, or 264,000 barrels a day (bbl/d), illustrating the outsized role American oil now has in Britain’s energy mix.

That level was more than Norway, Russia, Nigeria or Algeria, according to data from the cargo-tracking company Kpler, which have all been major suppliers to the U.K. in recent years. Meanwhile, operators in the U.K. portion of the North Sea have battled to stem production declines.

While monthly export volumes can be volatile, the rising volume of U.S. crude heading to the U.K. is part of a trend since Washington lifted widespread restrictions on exports in 2015. In 2018, the average volume of U.S. crude exported to the U.K. doubled to 160,000 bbl/d, second only to Norway over the course of the year and up from less than 20,000 bbl/d in 2016.

“We’re likely to see more U.S. exports to the U.K.,” said Professor Paul Stevens, an energy expert and fellow at Chatham House.

“It’s geography—why sail further than you need to when the U.K. is the first big market the U.S. can reach?”

The surge in U.S. crude supplies comes as the country’s production has risen close to 12 million bbl/d, up from just 5 million bbl/d a decade ago, thanks largely to oil supplies from shale formations that have been exploited through advances in horizontal drilling and hydraulic fracturing. 

That has allowed Washington to pursue a policy that the Trump administration has dubbed “American energy dominance,” with the country overtaking Russia and Saudi Arabia as the world’s largest oil producer, as well as becoming a major gas supplier.

Shipments overseas have jumped since the U.S. lifted restrictions on exports that had been in place since the Arab oil embargoes of the 1970s, with Washington keen to reap the economic benefits and wield its energy clout as a tool of foreign policy. 

While oil analysts say the jump in exports to Britain has primarily been driven by economics, the country’s growing reliance on one supplier may still raise questions at a time when U.K. trade policy is already in flux due to Brexit.

U.S. exports to the U.K. peaked in 1957 after President Dwight Eisenhower authorized 300,000 bbl/d of shipments to relieve shortages caused by the shutdown of the Suez Canal, partly in return for the U.K. and France agreeing to withdraw troops, according to the book Risk-Taking in International Politics by Rose McDermott.

Tight regulations on the U.K.’s own nascent shale industry have also been attacked by energy executives including Ineos’s Jim Ratcliffe, the U.K.’s richest man, who have warned the government they are harming British competitiveness.

The U.K. has a diverse range of oil suppliers, with more than 50 countries having exported crude to the country in the past three years, but others closer to home such as Norway may feel they are losing out. Norway’s crude exports to the U.K., which alongside domestic production have made up the bulk of the feedstock for the country’s 1.1 million bbl/d of daily refining activity, fell 13% last year. 

The rise in U.S. exports to the U.K. has been driven primarily by two U.S.-based companies, Exxon Mobil Corp. (NYSE: XOM) and Valero Energy Corp. (NYSE: VLO), which own two of the six oil refineries still operating in the U.K. Exxon Mobil’s Fawley plant near Southampton, the U.K.’s largest oil refinery, in January imported more than 4.3 million bbl of U.S. crude primarily sourced from the Permian Basin shale field in Texas, according to Kpler.

Last year. Exxon Mobil said it planned to spend £500 million (US$647 million) on the 270,000 bbl/d facility to expand its lifespan. Fawley is set to take the first U.S.-to-U.K. supertanker shipment later this month, carrying more than 2 million barrels.

Valero, the world’s largest independent refiner, imported 2.6 million bbl of U.S. crude in January to its plant in Pembroke, Wales, while a further 2 million barrels went into the Tranmere oil terminal that feeds the Stanlow refinery on the south side of the river Mersey, which is owned by the Indian company Essar.

A spokesman for Essar said U.S. barrels were “competitive” and well suited to the refinery. Exxon Mobil and Valero did not respond to requests for comment.

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