US eases crude oil export ban; allows trading with Mexico

Approval from the U.S. Commerce Department comes after the same agency allowed for exports of lightly processed oil past year. That proposed project would carry crude oil from Canada’s tar sands to refineries on the Texas Gulf Coast, so the influx of heavy crude from Mexico could play into a decision about whether the controversial pipeline is necessary. He declined to offer further details on volumes, saying only that the number of approvals was “a handful”.

“If you look at the regulations that the Commerce Department has set, they set a pretty low bar for swaps with Mexico, it’s just that nobody had asked before”, Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy, Bordoff, a former energy adviser to President Obama, said in a phone interview.

Citing the revolution in U.S. production ushered in with the boom in fracking production, Republicans in Congress and the oil industry have increasingly lobbied the administration to allow U.S. producers to sell crude on the world market.

The move is likely to weigh on Brent crude prices. Opponents, including environmentalists, worry that an increase in oil exports will mean an increase in oil production and greenhouse gas emissions. Lisa Murkowski of Alaska, who has pushed for lifting the ban, called it a positive step but added that she would still push for full repeal “as quickly as possible”. Exports of refined fuels, such as gasoline or diesel, are also allowed.

The U.S. official declined to identify who will receive the license to export the oil or how much can move in the exchange. The U.S. crude that goes to Mexico must be refined there.

However, the one-year licenses for swaps with Mexico can be renewed or revoked, the official said, and all the oil covered by the exchanges must be refined at its destination, either in Mexico or the United States.

“These are exchanges, so if a barrel goes out then a barrel goes in”.

Oil producers in the Eagle Ford and other shale plays will now be able to trade crude with their counterparts south of the border.

This article was from Reuters and was legally licensed through the NewsCred publisher network.