Goldman Sachs' Crude Oil Outlook
US crude trade at a big discount compared to Brent crudeReuters

The US is seemingly making a strategic mistake by restricting crude exports, leading to oversupply and lower oil prices.

In an opinion piece, the Financial Times writes that export restrictions on crude are hurting the American oil industry, and asks authorities to change the 1970s-era rules that are "a relic of the Opec oil embargo."

The newspaper noted the US rules to restrict its oil producers from international sales led to two crude gluts – one in the world and another in the US.

The continued plunge in oil prices has negatively affected the US shale industry, where capital spending is being cut back, drilling rigs idled and staff laid off.

US oil producers' problems are exacerbated by regulations kept in place by their own government, and the regulations have served no useful purpose, according the newspaper.

"Crude storage tanks in the US have been filling at a rate of almost 1.5m barrels per day, or about 16% of all the country's production, as producers struggle to find buyers," FT writes.

"As a result, the gap between the price that producers receive for their crude onshore in the US and what they would be paid if they could sell in world markets has widened sharply."

US benchmark West Texas Intermediate is currently trading at a $9 (£6, €8.3) discount to the internationally traded Brent crude, compared with near parity in January, and most of the discount appears to be a result of the restricted market available for US crude, according to FT.

"By continuing to restrict exports, the US is therefore undermining its own production and helping competitors such as Russia and Saudi Arabia to increase their share of world markets," the newspaper added.

The US has recently eased rules to allow increased exports of lightly processed crude, but the move is not comprehensive enough to make a real difference.

FT notes the best solution would be the complete abandonment of all oil export controls, given the severity of the crisis for US oil producers.

"In the global oil price war, the US is battling with one hand tied behind its back. It is time to abandon an outdated policy and make it a fair fight," the newspaper concluded.

WTI crude for delivery in April is trading down 0.14% at $49.93 per barrel as at 3.12am ET, while Brent crude is trading down 0.50% at $58.24.