Soaring oil production in the United States may lead the Gulf Coast to end sweet crude imports by the second half of this year, marking the start of a fundamental shift in global oil supply routes, Citigroup said in a report issued on Wednesday.
US oil production has grown to 6.9 million barrels a day (bpd) from a monthly average of 5 million bpd in 2008, according Energy Information Administration data, an amount similar to the total production of many oil nations such as Norway and Algeria.
Citigroup said the oil supply glut, slower growth in refining capacity, and falling demand for oil products will reduce sweet crude supplies from West Africa, the Mediterranean and the North Sea.
"By this coming summer, the US should no longer need to import light sweet crude into the US Gulf Coast, while refiners on the US East Coast should be able to replace some of their imports with substitutes produced in the US mid-continent," Citi said. The decline in demand for oil products in the gas-guzzling United States will stem from new fuel-efficiency rules for cars and trucks and a switch to natural gas from oil to take advantage of depressed gas prices.
Under a standard finalised by the government last August, future car models will run 54.5 miles per gallon (mpg), up from 35.5 mpg under a standard covering model years 2011-2016. This change will dampen demand for oil products by as much as 2 million bpd, Citi said, adding it expects 30 percent of the country's heavy-duty truck fleet to convert to Liquified Natural Gas (LNG) by 2015, lowering diesel demand by 600,000 bpd. There were 250 million registered vehicles in the United States in 2010, according to the Bureau of Transportation Statistics, including about 48 million trucks.