ByBloomberg

The U.S. probably won’t lift its ban on crude exports within the next five years, undermining long-dated prices of New York-traded West Texas Intermediate relative to Brent, according to Bank of America Corp.

Rules against the overseas shipping on U.S. crude will remain in place despite surging domestic production, unless oil prices collapse, the bank said in an e-mailed report. The discount on the December 2019 WTI contract of $11.50 to European marker Brent “seems justified.”

“A full repeal of the crude oil export ban is at least five years away under most scenarios, unless of course domestic U.S. crude oil prices collapse,” Francisco Blanch, New York-based head of commodities research, said in the report dated April 17.

U.S. oil production climbed to 8.301 million barrels a day this month, the highest since 1988, according to the Energy Information Administration. A 1975 law that followed the Arab oil embargo two years before prevents most overseas U.S. crude shipments.

Some steps could be taken to relieve the U.S. supply glut that wouldn’t require the legislation to be repealed, according to Bank of America. More permits could be granted for exports to Mexico or Canada, rules on the shipment of condensate could be adjusted, or agreements to swap light U.S. oil for heavy foreign grades could be implemented, the bank said.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Rachel Graham, John Deane