President Barack Obama has fired a shot at the Organisation of Petroleum Exporting Countries (Opec) in the war to control global oil markets by quietly sanctioning the easing of America’s 40-year ban on exporting crude.
The US government has reportedly told oil companies they can begin to export shipments of condensate – a high-grade crude produced as a by-product of gas – without going through the formal approval process. The move could signal that a full opening of the export ban, which has existed since the oil shock of the 1970s, is imminent.
Brent crude fell sharply on the news, first reported by Reuters. The global benchmark opened down almost 2pc in London at $56.85 per barrel as it closes in on its biggest annual drop since the financial crisis in 2008. Brent has lost 50pc of its value since reaching its year-long high in June.
The ending of America’s self-imposed embargo on oil exports would mark a serious escalation in the unfolding oil price war with Opec led by Saudi Arabia. The kingdom has made it clear that it is willing to watch the price of oil fall lower in order to protect its share of the global market. Opec share has fallen to about a third of world supply, down from about half 20 years ago as the flood in shale oil drilling in the US and new supplies from Russia and South America have created a global glut.
Meanwhile, the sharp fall in the value of oil is placing economies in major producing nations such as Venezuela and Russia under extreme strain.

Venezuela – also a member of Opec – has fallen into recession after its economy contracted for the first three quarters of the year, while inflation topped 63pc in the 12 months to November. The South American oil giant’s economy shrank 2.3pc in the third quarter, after contracting 4.8pc in the first quarter and 4.9pc in the second, the central bank has said.

Recession also looms in Russia, where the economy has fallen into decline for the first time in five years, according to official figures, which show that GDP contracted by 0.5pc in the year to November. Falling oil prices are helping the US to exert pressure on the Kremlin over President Vladimir Putin’s support for separatists in Ukraine.

Oil also came under pressure on the final day of the year after new data showed that China may miss its growth target for 2014. China manufacturing PMI fell to 49.6, down from final 50.0 in November. This is the first time in the second half of the year that China’s factory sector has contracted and has increased the possibility that 2014 GDP will miss the official 7.5pc target

“Weak Chinese manufacturing data also damaged demand sentiment around oil as Brent breached the $57 handle,” said Peter Rosenstreich, head of market strategy at Swissquote.