US undertakes first oil export in 40 years

The first shipment of crude oil to an overseas buyer from the United States has departed a Texas port, just weeks after a 40-year-old ban on the export of the country’s crude was lifted.

The Theo T tanker on Thursday left NuStar Energy LP’s dockside facility in Corpus Christi, Texas, along the western shore of the Gulf of Mexico, Mary Rose Brown, a spokeswoman for NuStar, said in an e-mail, according to Bloomberg.

The ship was said to be carrying a cargo of oil and condensate to Italy from ConocoPhillips’s wells in south Texas that was sold to Swiss trading house Vitol Group.

A campaign by oil explorers including Continental Resources Inc., Chevron Corporation and Exxon Mobil Corporation to lift the 1970s-era export prohibition culminated in a congressional decision to end the ban.

Vitol, which owns stakes in refineries from northern Europe to Australia, has a second cargo of US-sourced crude scheduled to depart a Houston port within days.

Industry experts have said Nigerian crude oil, which has been struggling to sell in reticent months, may suffer further setbacks in the global market following the lifting of the ban on US oil export.

The US Congress had on Friday approved the lifting of the ban on December 18, as part of a $1.1tn spending bill, which includes a provision that would allow the export of US crude for the first time in more than 40 years. The bill was later signed by President Barack Obama.

Congress, concerned about US dependence on imported oil, imposed the crude oil export ban in 1975 after the Arab oil embargo of the early 1970s that sent gasoline prices soaring and contributed to runaway inflation. Arab members of the Organisation of the Petroleum Exporting Countries imposed the embargo following the US decision to re-supply the Israeli military during the 1973 Arab-Israeli war.

Nigeria recently lost its biggest customer, the US, which now buys only a small amount of Nigerian crude oil due to the dramatic rise in domestic shale production.

The growth in US light, sweet crude oil production has resulted in a sizable decline in US imports of crude grades of similar quality, such as Nigeria’s crude oil.

The sustained decline in crude oil prices since June 2014 has exacerbated the dwindling fortunes of the Nigerian crude, with the nation’s crude differentials trading at 10-year lows.

A lot of Nigerian crude are said to be currently floating on ships with a significant amount finding homes in storage tanks rather than in refineries as a result of the supply glut, which is dominated by largely light sweet crudes, in the global market.

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