The US government on Friday opened the door for the country’s oil firms to have some limited right to trade crude oil with Mexico in what is essentially a swap deal.
The move marks the latest small step towards the US ending its four-decade-long ban on exporting crude.
Oil firms and politicians in the US, have been pointing to the glut of production domestically as justification for relaxing the restrictions on crude exports and the Obama administration has been edging in that direction. Once in effect the new rules could see around 100,000 barrels imported per day.
It is especially timely coming at a point when Mexico, too, is moving in a more liberal direction by opening up its previously heavily state regulated oil sector to overseas competition.
Permits should be issued by the US Commerce Department before the end of August and be good for a year. Under their terms Mexico will be able to receive oil but it must ship a similar quantity to the US.
Such a swap makes sense because of the differing qualities of the oil; Mexico’s being of a lower quality heavy crude that is in demand at some US refineries.
Previously only Canada was exempt from the ban on US exports.