A spike in gasoline and diesel prices triggered by the US-Israel war with Iran has prompted oil industry officials to preemptively argue against potential calls for the reinstatement of crude export restrictions the US lifted more than a decade ago.
Oil industry officials see no indications that President Donald Trump or other policymakers are considering a ban on exports, which they say would cause chaos in global markets and cut off energy supplies to allies when they need it most. In 2015, the industry successfully lobbied the US Congress to lift export limits that had been in place for decades, opening up a US crude export market that averaged 4mn b/d last year.
"We don't believe the idea of banning domestic exports is being considered seriously, nor should it be," an oil industry official said. "The US doesn't have a supply problem, and halting exports only hurts our economy."
But the recent surge in fuel prices — retail diesel prices rose by nearly $1/USG in the week ending on 9 March, and regular grade gasoline increased by nearly 50¢/USG — has put the industry on the defensive. Banning exports would likely result in an oversupply of light sweet crude in shale producing areas such as the US Gulf coast, where most of the region's refineries are optimized to process sour crude, according to industry leaders.
"Pulling American oil off the world market would further tighten global supply and could trigger cascading economic consequences for consumers," American Petroleum Institute chief executive Mike Sommers said in a series of posts on X that attacked "bad policy ideas" of restricting exports.
US energy secretary Chris Wright said during an interview on CNN on Thursday there was "no discussion" in the administration on banning oil exports. Trump, who has spent his second term focused on achieving "energy dominance", the same day said the rump-up in oil prices would result in a financial benefit to the US.
"The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money," Trump wrote on his social media platform.
But the administration's approach on a separate energy policy lever has already shifted. As recently as last week, administration officials said they were not considering the release of crude from the US Strategic Petroleum Reserve (SPR).
That stance changed as sustained Iranian attacks on ships near the strait of Hormuz drove up oil prices. Trump on Wednesday ordered the release of 172mn bl of crude from the SPR, the second-largest release since the reserve was created.
Reimposing a ban on crude exports could create a "short-run bonanza" for US refineries that specialize in processing light sweet crude, which they could buy at a discount, economists at the US Federal Reserve Bank said in a research report in 2022. But those dynamics would not last because lower prices would lead shale producers to cut output, according to the report, and domestic fuel prices would be unchanged as long as refiners could export refined products.
