Imposed more than forty years ago, during a surge in Middle East conflict, unrest in Ukraine is adding to pressure on the US to lift its long-standing ban on oil exports.Ole Hansen, Saxo Bank's Head of Commodity Strategy, considers the implications of a possible ending of the ban and how markets could react. 

He notes that there have been attempts to overturn the ban but so far US Congress has refused. Hansen says that over the past four years US oil production has ‘exploded’ with shale oil production now at 4 and a half million barrels a day. Hansen points out that internal pressure on the US oil price is increasing. Furthermore oil from the Permian Basin in Texas is selling at USD 10 below the WTI price which is bad for business.

South Korea and Mexico want to put pressure on the US to export. And with ever increasing tensions between Russia and Europe, the EU also wants the US to review its policy. Europe currently imports one third of its oil from Russia.

So what about the markets? Hansen says if Europe starts to buy oil from the US, Russia will need to find other customers and will towards Asia. It would mean global oil prices would be lower.

Hansen points out that increased supply in the Atlantic Basin has already put pressure on the oil price. If the US lifts its ban the price would fall even lower. Hansen says the spread between WTI crude and Brent would also contract.