Obama eases oil export ban with big swap deal with Mexico

The U.S.is easing its longstanding ban on crude oil exports by allowing limited trade with Mexico.

Congress has pressed the Obama administration to lift the crude oil ban, with Republicans arguing it would make the U.S.an energy superpower. Canada is the only other nation that is exempt from the prohibition on exports.

Petroleos Mexicanos, Mexicos state-owned crude producer, did not have an immediate comment on the approval of the swap, according to a press official who cannot be named due to company policy.

Permits should be issued by the US Commerce Department before the end of August and be good for a year.

U.S. refiners have historically been better able to process the heavier crude oil, although improvements are being made to process the lighter oils coming from shale. While denying some applications, it is approving the exchange with Mexico. Pemex said the U.S. crude will help boost gasoline production at its refineries in Salamanca, Tula and Salina Cruz.

Pemex’s Salina Cruz refinery, the country’s largest, will also receive some U.S. imports eventually, the company said in a statement on Friday.

American shale drillers should benefit from the new exports after a recent glut in oil has helped drive prices down over the past year – domestic oil production has grown to more than 9 million barrels a day.

The move marks the latest small step towards the US ending its four-decade-long ban on exporting crude.

While the Commerce Department simultaneously rejected other applications for crude exports that violated the ban, the move to allow trading with Mexico marked a significant shift and an additional sign that the Obama administration may be open to loosening the export ban. “Oil is the only commodity in North Dakota that faces these sorts of export restrictions, and it’s past time for that to change”.