(Adds details on estimated chance of lifting ban)
WASHINGTON, May 28 (Reuters) - The U.S. Congress could lift the 40-year-old ban on domestic crude oil exports within a year as a drop in gasoline prices and the potential return of Iranian oil to global markets makes it an easier measure for politicians to support, Bank of America Merrill Lynch analysts said on Thursday.
The analysts found “a surprising amount of support to remove the ban across members of the House and Senate,” at a meeting they held with lawmakers, they said in a BofA Merrill Lynch Global Research report.
They estimated a more than 50 percent chance of repealing the ban over the next 24 months and said that doing so could narrow the discount for U.S. benchmark WTI crude versus international Brent to just $3 a barrel in 2017 from the current spread for 2017 of $7.40 a barrel.
U.S. gasoline prices have dropped since last year along with global crude prices, thanks to strong crude output from the United States, Saudi Arabia and Iraq. On Thursday, the U.S. average for regular gasoline at the pump was nearly $2.74 a gallon, down from $3.65 a year ago, according to the AAA motorist club.
If that remains the case, it has the potential to allay politicians’ fears that they could be blamed for any rise in gasoline prices if the crude oil export ban was lifted. If talks between six global powers and Tehran on Iran’s nuclear program reach a deal on June 30, sanctions on Iran’s oil exports could be removed soon after. That could also put pressure on global oil and U.S. gasoline prices.
Backers of removing the ban in Congress said they had not come across any fellow members who were “intellectually opposed” to lifting it, even among Democrats, the analysts said.
Still, two key Democrats in the Senate, Ed Markey and Robert Menendez, are opposed to lifting the restriction. And supporters of lifting the ban have a long way to go to get the 60 votes that will likely be necessary to pass a bill.
Senator Lisa Murkowski, a Republican and chair of the energy committee, has introduced legislation to lift the trade restriction. She has 13 co-sponsors on the measure, including one Democrat in the 100-member chamber. (Reporting by Timothy Gardner; Editing by Marguerita Choy and Leslie Adler)