June 25 Shares of U.S. refiners such as Valero Energy Corp dropped on fears of a rise in crude costs after U.S. officials allowed energy companies to export very light crude oil, or condensate, after it has been minimally processed.
The U.S. Department of Commerce's Bureau of Industry and Security told Pioneer Natural Resources Co that lightly processed condensate would be eligible for export without a license.
The ruling sent down shares of refiners most levered to light crude oil. Valero shares were down about 9 percent at $50.71.
Shares of Alon USA Energy Inc were down 4 percent at $13.27 in morning trading, Delek US Holdings Inc and HollyFrontier Corp were down nearly 7 percent, while those of Western Refining Inc were 6 percent lower.
On the other hand, the ruling lifted shares of many U.S. oil and gas producers, particularly those more weighted to condensate.
Eagle Ford shale producers Rosetta Resources Inc and SM Energy Co were up about 4 percent.
Analysts said the ruling was one step towards alleviating the light oil glut on the U.S. Gulf Coast and would potentially weigh on refining margins.
U.S. refiners may see crude costs go up as they would have to compete with international buyers for supplies, they said.
Most refiners, with the exception of Phillips 66, have campaigned against a lifting of the U.S. ban on exports.
"This (the Commerce department's ruling) may be a precursor or trial balloon to less restrictive condensate exports or even light crude oil over the longer term," analysts at Tudor Pickering Holt Energy wrote in a note.
The Department of Commerce had given approval via a private ruling to Pioneer and Enterprise Product Partners LP to export the condensate, the Wall Street Journal reported on Tuesday. (Reporting by Swetha Gopinath in Bangalore; Editing by Don Sebastian)