The U.S. Congress voted on Friday to repeal a 40 year old ban on exporting domestically produced crude.
According to Reuters, the Senate voted 65-33 to lift the ban as part of a $1.8 trillion government spending and tax relief bill.
President Obama promptly signed the bill after it was cleared by Congress, Reuters added.
The ban was first enacted in response to the Arab Oil Embargo in 1975.
The bill will allow U.S. producers to export light, sweet crude to international markets and could provide an incentive to boost production when oil prices recover.
The majority of U.S. refineries are designed to handle sour crude, not the light crude that has flooded the market since the start of the shale boom.
Lifting the ban will allow U.S. firms to ship domestically produced light crude to refineries abroad that are better equipped to handle the product.
Industry groups applauded the decision, calling it a victory for domestic energy security and a boon to the job market.
“Ending the decades-old ban on crude exports is a huge win for consumers, jobs, the economy and our energy security. We are bolstering America’s status as an energy superpower. U.S. producers will now be able to compete in the global oil market and consumers will reap the benefits. Studies show lifting the ban would lower gas prices by up to 12 cents per gallon,” American Petroleum Institute President and CEO Jack Gerard said.
However, with West Texas Intermediate prices once again approaching 11 year lows and upstreams cutting rig counts, any short-term impact the repeal will have on production is likely to be small.
U.S. drillers dropped 17 gas rigs but added 17 oil rigs last week, sending the U.S. rig count down to 871 rigs compared to 2,266 rigs a year ago, according to Baker Hughes.
West Texas Intermediate fell below the $36 per barrel mark on the news of the repeal and was trading near 11 year lows at about $34.23 per barrel Monday morning, Reuters said.
Brent prices also tumbled to around $36 per barrel in early morning trading on Monday, down from a high of about $47 per barrel a month ago.
“In a stronger price environment I’d expect to see more exports and producers eager to ramp up prices,” Wood Mackenzie analyst Mark Broadbent told Yahoo Finance.