With the details of the nuclear deal between Iran and the P5+1 now released, discussion on lifting the 1970s-era crude oil export ban may be part of the congressional examination on the floor. If American negotiators are now prepared to allow for greater exports of Iranian energy resources, should the self-imposed ban on American crude oil remain in place?
The geopolitical perspective on this situation is clear. Any increase in Iranian crude on the global market augments that country’s position as an energy supplier, which often comes with added political implications. Historically, hostile energy-rich countries have manipulated their position as a supplier for political gains. While it could take over a year for significant volumes of Iranian crude to hit the market given the required infrastructure development, the country is aiming to return to its pre-sanctions production levels. These developments could have greater global market ramifications. For example, Saudi Arabia, competing with additional Iranian crude, could continue to maintain or even increase its production levels to maintain its global market share. Greater Saudi volumes on the market limit the growth potential and influence of American production.
Allowing exports of American crude, proponents of lifting the ban argue, could counterbalance any additional relative power gained by Iran’s increased oil exports, not to mention other potential competitors on the global market, such as Russia. Although it is challenging to predict exactly how much additional American crude could enter the market, or where these shipments would ultimately end up, the very concept of American-produced crude oil available globally could have significant effects on the way American allies around the world secure their supply deals. As a December 2014 Congressional Research Service report on the subject notes, “Nevertheless, any additional barrels that the United States produces will dilute OPEC’s market share, assuming demand stays the same, and this may be viewed positively by most oil-consuming countries.” This would help American import-dependent allies reduce their dependencies on potentially volatile exporting countries by at the very least offering a viable diversification option. In 2011, prior to the implementation of many of the Iranian sanctions in question, the European Union was importing around 600,000 barrels per day (bpd) of Iranian crude and condensate, making it the second-largest regional buyer of that country’s production. In another example, 96 percent of Poland’s crude oil imports in 2012 were imported from Russia. The mere specter of American crude in the market, regardless of its actual destination, could grant these ally countries negotiating leverage against rogue nations, ultimately decreasing their global influence.
As Congress progresses with its review of the Iranian deal, the energy security and geopolitical implications of greater amounts of Iranian oil on the market could be a major talking point. To what extent proponents of lifting the American crude oil export ban utilize this will be worth watching. Developments surrounding the Iran deal could play an increasingly vital role in American energy policy moving forward.