The US department of commerce is expected to issue licences approving exchange of oil between the US and Mexico. The oil swap proposal was submitted by Mexico eight months ago, asking for about 100,000 barrels a day of light crude oil in exchange for heavier Mexican oil.

This landmark agreement would allow selling of American crude to Mexico for the first time – a surprising development, given that the US has now shown any sign of changing its oil policy. “It wasn’t long ago that the Obama administration indicated that they were happy with the oil exports situation after the condensate loosening and wouldn’t be taking any further steps to loosen it,” Thomas Pugh, commodities economist at Capital Economics, tells GTR.

Pemex, the Mexican state-owned petroleum company, wrote in a statement that the swap will be highly beneficial for the country, which mainly produces heavy oil. The exchange will allow Pemex to diversify its oil mix and improve the process of fuel production at refineries in Salamanca, Tula and Salina Cruz, which are mostly configured to process light oil. According to Pemex, the light and heavy mixtures will result in increased production of gasoline and diesel, less volume of fuel oil and will have the environmental benefits of better quality fuels.

“It is another option that Mexican refiners can use. At the minute the discount of US crude to Brent is quite large, around US$6 per barrel, which increases its attractiveness to Mexico, but it is unlikely to be this wide for long, at more normal levels, of US$2-3 per barrel, I’m not sure if there will be much demand from Mexico,” says Pugh.

This kind of oil export is one of several possible exemptions allowed in a 40-year-old US law which bans most overseas oil shipments, and has been the object of recent scrutiny, with shale oil producers blaming the ban for low prices. A Bank of America Merrill Lynch report from May found “a surprising amount of support” to remove the ban across members of the House of Representative and Senate. According to Pugh, the swap is a step in the ban-lifting direction, but not a particularly large one: “This kind of arrangement is unlikely to be feasible with other countries, given the additional transport costs.”

The licences are expected to be issued officially by the end of August and they will be valid for a year.