U.S. crude's significant discount to international oil prices has been a major factor in booming American exports, but the price difference has narrowed this month, setting up a potential risk to the overseas shipments.
The price difference between Brent crude, the international benchmark for oil prices, and U.S. West Texas Intermediate has shrunk by about 40 percent in January to its narrowest in five months. It now stands at roughly $4 a barrel, down from $7 a month ago.
When Brent trades at a premium to WTI, it encourages foreign buyers to buy U.S. crude.
"Part of the growth in U.S. exports has been this arbitrage," said John Kilduff, founding partner at energy hedge fund Again Capital.
"We'll have to see at what point does the export picture start to get restrained as a result of the lower spread. Is that $3 or lower?"