US oil exports have hit a record as WTI crude trades at its cheapest in 3 years. Here's what's going on.

• US crude exports have surged to a record high, as a world hungry for oil snaps up American supplies.
• US oil is trading at its cheapest in three years, compared with Brent crude — a key reason for the jump.

US oil exports have surged to a record high, after a sharp drop in the price of the country's West Texas Intermediate crude compared with the international benchmark.

A drop in demand for fuel at home and President Joe Biden's release of supplies from strategic oil reserves help explain the downward pressure on US prices, analysts say.

The US shipped out 4.6 million barrels of crude every day last week — a 21% jump from a week earlier, according to Energy Information Administration figures. Once petroleum products are factored in, the total reached a record 10.9 million barrels a day of oil.

The jump in exports is being powered by a widening gap between WTI and Brent crude, the international benchmark, on global markets, analysts say. In fact, US oil is at its cheapest compared with Brent since 2020, when its price turned negative as the onset of the coronavirus pandemic caused chaos.

Each barrel of WTI crude was $9.42 cheaper than a barrel of Brent crude on Tuesday. The gap has since come down a bit.

The difference in price is a big incentive for countries and traders to start buying their oil from the US, especially as Europe tries to cut back on Russian crude. After all, they're always looking for the cheapest oil so they can make or save more money.

Here's why US oil is so cheap

"The best cure for high prices is high prices," energy analysts like to say. That's exactly what seems to be happening in the US.

As oil prices shot higher this year on the back of Russia's invasion of Ukraine, gasoline prices in the US hit record highs of above $5 a gallon.

There are growing signs that those sky-high gas prices are simply putting Americans off driving. Gasoline demand is well below where it was last year, according to Tamas Varga, analyst at PVM Oil Associates.

"The four-week average is more than 600,000 barrels per day below the year-ago level, not exactly bullish for WTI," he told Insider.

Another factor, Varga said, is Biden's release tens of millions of barrels from the US's strategic oil reserves, in an effort to lower gas prices. It's having an effect, analysts say, although it's hard to quantify.

WTI is now down around $22 from its June high, to $99 a barrel as of Thursday. However, concerns about a slowdown in the global economy have likely done most of the work.

Brent oil is expensive

The two most traded grades of oil are Brent and WTI. Brent crude is oil produced in the North Sea, in the Brent oil fields between Britain and Norway.

Brent has become the benchmark price for most of the world, including Europe, the Middle East and Africa. That means developments in those regions impact the price.

Right now, there's a shortage of oil globally. OPEC+ — a group of oil producers whose member states are largely African and Middle Eastern, and its allies — is limiting crude supply, Varga said. Meanwhile, demand from Asia has picked up after the coronavirus pandemic.

"Thirdly, stalling Iranian nuclear talks also creates a crude shortage on this side of the Atlantic," Varga said.

US exports are set to stay strong

America's oil exports could well continue their strong run.

"US crude should be attractive for European and Asian refiners, given the steep discount," Varga said. "Product exports should also remain healthy because of lack of refining capacity in Europe."

Simple market dynamics should gradually work away at the gap between WTI and Brent crude, however. With more people buying US oil, the price of WTI crude is likely to start rising again.

WTI crude traded at around $99 a barrel on Thursday, while Brent stood at roughly $108.50 a barrel.