If the U.S. is willing to conclude a deal with Iran, lift sanctions and allow Iran to export oil, shouldn’t the U.S. itself allow oil exports?
That is the conclusion from a new report issued by the Majority (i.e. Republican) Staff of the Senate Energy and Natural Resources Committee in the U.S. Congress.
Citing EIA data, the report says that Iran will be able to ramp up oil production by 700,000 barrels per day by the end of the year, of which 600,000 barrels per day would be from production that was shut in because of sanctions. That could potentially push down oil prices by $5 to $15 per barrel. Related: Could $12 Trillion Trigger A Renewables Revolution?
The Senate report even cites Obama administration officials, which trumpeted the fact that U.S. oil production made the Iran sanctions possible. By adding several million barrels per day to oil markets and pushing down prices, U.S. shale provided the room for cutting off Iranian oil without choking the global economy.
But the effort against Iran stands in stark contrast to America’s policy on its own oil, the committee says.
“The specter of an agreement with Iran over its nuclear program has brought to the fore a great geopolitical irony: lifting sanctions will boost Iranian oil exports at a time when federal law and regulations generally prohibit American oil exports,” the report concludes. By allowing Iran to export more oil but not allowing U.S. companies to do the same, the Senate Committee argues, it amounts to a “de facto sanctions regime against U.S. producers.” Related: What Oil Export Ban Means for Investors
The report will be used as ammo in the ongoing campaign to lift the ban on exports by Senator Lisa Murkowski, the head of the Senate Energy Committee.
It also comes a few weeks after her committee released a separate report that provided a blueprint for other countries on how to obtain access to U.S. oil. While U.S. policy broadly prohibits crude exports, it does offer a major exemption for Canada. And recently, there has been pressure to allow oil swaps with Mexico, which could essentially add that country to the exemption list. Related: The Best Play In Solar Right Now
Sen. Murkowski released a report in early June that suggested other countries might apply for the same exemption, and the report looked at “case studies” for six potential U.S. allies to do so, including Poland, Japan, Belgium, the Netherlands, India, and South Korea. While not officially stated, the report was intended to shoot holes in America’s export prohibition.
Sen. Murkowski appears intent on keeping up the pressure to end the ban.
By Charles Kennedy of Oilprice.com
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