U.S. President Barack Obama.JIM WATSON/AFP / Getty Images
The U.S. will permit some crude oil sales to Mexico in a step toward loosening the government's ban on most domestic oil exports in place since the 1970s oil embargo, an administration official said.
The Obama administration plans to approve an exchange of Mexican crude oil for similar quantities of American crude oil, granting a Mexican request for permission to relax the 40-year-old U.S. ban, said the official.
The Commerce Department is taking action on applications for crude sales under existing law, the official said. While denying some applications, it is approving the exchange with Mexico.
The transaction would technically be a swap for Mexican oil that's been shipped to the U.S. Gulf Coast for decades. The U.S. bans most exports of unrefined crude, with exceptions such as shipments to Canada.
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. U.S. oil supply has increased in the past five years, and a majority of that growth is in light oil from shale rock.
President Barack Obama's administration already opened the door for expanded exports of an ultra-light type of crude oil known as condensate that has gone through minimal processing. The Commerce Department published guidelines on its website for such exports Dec. 30, the first public explanation of the rules.
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.
Petroleos Mexicanos, Mexico's 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. Pemex, as the company is known, is hoping last year's opening of Mexico's oil industry to private competition will end a decade-long slide in crude production.