Will US become oil exporter?

Will US become oil exporter?

Congressional leaders have agreed on a fiscal plan that would avert a ban on crude oil exports from the US. The move "puts the United States in the driver’s seat of energy policy worldwide," Bloomberg cited the Republican Representative from Texas, Joe Barton, as saying.

The agreement must still be approved by the Senate and the House of Representatives, however, according to the legislator, this decision "is already a huge victory."

During the past two months the House of Representatives twice voted in favor of a bill lifting the ban on exporting oil, but in neither case was it supported by the Senate.

Barack Obama’s administration also opposes the lifting of the oil export ban. White House spokesman Josh Ernest said that the decision on this matter should be taken by the Department of Trade, not by Congress.

The ban on exports of US crude oil was introduced in 1975 in response to the Arab oil embargo in 1973, TASS reports. US companies can supply natural gas abroad only through licenses issued by the government.

The OPEC Secretary General, Abdallah Salem el-Badri, said yesterday that oil prices won’t be affected by US crude exports.

"The net effect of exports of American oil on the market is zero. This will have no effect on the price because the US is still an importing country," he believes.

The director of the Center for Studies of World Energy Markets at the RAS Institute of Energy Research, Vyacheslav Kulagin, said in an interview with Vestnik Kavkaza that US crude exports will not have any serious impact on the market

"The fact is that the US is an importer of oil and petroleum products, therefore if the US exports any volumes, they have to increase the volume of imports by exactly the same amount, they have no other choice. The balance in the world market will not change. That's why it is an extremely political step, which in principle could give a signal to investors that it is possible to invest in development and that in the future these volumes can be sold not only on the US market, but also on the global market. But that is a matter for the distant future. It simply cannot have a significant impact on the market now," Vyacheslav Kulagin assured.

Sberbank CIB analyst Valery Nesterov told Vestnik Kavkaza that the possible lifting of the ban on exports of US crude oil is not a positive factor.

"It's about the fact that the United States until recently was the largest importer of oil and oil products. Now their dependence on imports has declined sharply. Moreover, they have exported a certain amount of oil to countries with which they have free trade agreements: primarily Canada and Mexico. That is, although formally exports were banned, oil transactions were carried out," the expert noted.

At the same time, he drew attention to the fact that we must remember that the American problem is that US refineries are focused more on the processing of medium and heavy crude oil, and production growth in the country in recent years has been carried out by shale oil.

"This shale oil, which is produced in large amounts of hundreds of millions of tons per year, is not demanded in such quantities by US companies. So it needs a way out. The United States may increase the supply of light oil to the market and this will adversely affect the price situation as a whole," the Sberbank CIB analyst said.

"There is an understanding that the production of US shale oil could, and likely will, decline, at least in the coming year. Accordingly, the amount of excess oil that they can offer to foreign markets, will also be reduced. But under today's market turbulence, this factor is new and negative for the global market," Valery Nesterov concluded.

The Deputy Director of the Institute of Energy Strategy, Alexey Belogoriev, told Vestnik Kavkaza that there will be no large-scale exports of US oil in the near future.

"This is an additional opportunity for companies to maintain the profitability of production by trying to play on the arbitration between different regions, as prices of WTI crude oil, as a rule, are always lower in the US than in Europe and Northeast Asia. But still the difference is not so great that it could become a mass phenomenon. The companies will not receive a large margin, and there is no serious oversupply in the US market. It will have no great effect on world oil prices: the prices are affected by the volume of US production, that is really important. It is affected by the quantity of excess supply, excess production and excess of supply over demand," Alexey Belogoriev explained.


Vestnik Kavkaza

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