Demand to export US crude is poised to soar as the nation’s surging supply of hydrocarbons creates a glut of the feedstock, according to Citigroup Inc., the bank that predicted a slump in the nation’s imports.

Oil companies will apply for government permits to sell crude overseas by 2015 and some may do so immediately, Edward Morse, Citigroup’s New York-based head of commodities research, said in a report this week. 

Shipments of refined oils such as gasoline, as well as liquefied petroleum gas, piped gas, and coal are now the same level as those of transport equipment, making hydrocarbons the joint-largest US export, Morse said.

While the US bans most crude exports under decades-old laws, a glut of the feedstock is adding pressure to export it from the Gulf of Mexico, Morse said. 

The nation’s refining hub has the capacity to process about 1.5 million bpd more light, sweet oil and its crude production has expanded by 1 million bpd in each of the past two years, he said. Light, sweet grades are less dense and contain less sulfur, making them useful for making fuels such as gasoline.

“The current crude glut on the US Gulf Coast will continue to spark requests for crude oil export licenses and a positive but restricted response is inevitable,” Morse said. “Applications for exports should start to soar.”

The Citigroup analyst predicted in December 2011 that America’s net oil imports would slump 60% by 2020 because of slowing consumption and rising production. The nation’s net shipments at the time were 9 million bbl and they averaged 7.8 million bbl so far in 2013, Energy Department data show.

Brent-WTI

The surge in energy production is driving down crude costs for USrefineries. West Texas Intermediate oil this year cost an average of $10.15/bbl less than Brent, the international benchmark. Brent cost an average of $2.16/bbl more than WTI in 2003.

Oil companies may be able to export crudes where laws governing such transactions aren’t clear, Morse said. President Barack Obama can also allow shipments in the national interest, the Citigroup analyst said. The Commerce Department’s Bureau of Industry and Security can also license sales while there are signs that the US could allow crude swaps with foreign suppliers, he said.

Venezuela, Mexico and Colombia all might benefit from swaps of US light crude for heavy oils, Adam Sieminski, administrator of the Energy Information Administration, the Energy Department’s statistical arm, said Oct. 29. A US light crude swap for heavy probably wouldn’t threaten energy security, he said.