The Commerce Department is “acting favorably on a number of applications” to export U.S. crude in exchange for imported Mexican oil, the official said.
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Oil exports have been mostly banned for 40 years under a law meant to protect the United States from global oil volatility.
The Obama administration will allow limited sales of U.S. crude to Mexico for the first time, a senior administration official told Reuters, marking another milestone in loosening a contentious ban on exporting domestic oil.
Mexico applied for a crude oil swap eight months ago after the US signalled that it was ready to relax the rule, which has been put under pressure by the huge expansion of production.
The 1975 Energy Policy and Conservation Act, which created restrictions against exporting U.S. crude, states that the law shouldn’t interrupt the trading relationship between the U.S. and Mexico or stop oil exchanges made for convenience or transportation efficiency. U.S. refiners will continue to get Mexican heavy oil, a better match for them than the deluge of light oil coming from Texas and North Dakota.
The export ban is a relic of the 1970s, after an OPEC oil embargo led to fuel rationing, high prices and iconic images of long lines of cars waiting to fuel up.
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. While denying some applications, it is approving the exchange with Mexico.
The move is likely to weigh on Brent crude prices. 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”.
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Oil producers including Exxon Mobil Corp. and Continental Resources Inc. have called for the U.S.to end the restrictions, saying booming domestic output reduces the need to keep supplies at home.
