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Nuclear Deal Opens World Markets to Iranian Oil as U.S. Export Ban Persists

Members of Congress renew calls to scrap the export ban as U.S., E.U. look to lift sanctions on Iranian oil

Oil refinery south of Tehran / AP
• July 14, 2015 12:44 pm

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Under a landmark nuclear deal reached on Tuesday, Iranian oil companies will have greater access to world markets than their American competitors.

If implemented, the deal will lift sanctions on Iran’s oil sector, allowing the country to export crude oil as it sees fit. Tehran hopes to double the country’s oil exports.

Meanwhile, a federal law prohibiting U.S. oil companies from exporting their products remains on the books. Industry groups and export ban opponents in Congress are pushing to rectify that imminent imbalance.

"Having the international market flooded with Iranian oil, while at the same time preventing U.S. oil producers access to the same global market, is not in the best interest of the U.S. or our global allies," said George Baker, executive director of Producers for American Crude Oil Exports (PACE) in a Tuesday statement.

According to Adam Sieminski, an official in the Department of Energy, lifting sanctions on the Iranian oil industry will result in an estimated one million additional barrels of oil on the global market.

As part of the agreement with Iran, U.S. and European leaders agreed to lift heavy sanctions on the country’s oil industry if the Islamic Republic cooperates with inspections of its nuclear program by the International Atomic Energy Agency.

In addition to the financial windfall increased exports would provide for firms such as the state-owned National Iranian Oil Company, critics say that lifting oil-related sanctions would place U.S. oil producers at a competitive disadvantage.

The lifting of sanctions will have both economic and geopolitical consequences, according to Sen. Lisa Murkowski (R., Alaska), who chairs the Senate Energy and Natural Resources Committee.

"If we lift the current sanctions on Iran while keeping in place our own domestic sanctions on crude oil exports, America’s ability to increase its domestic energy security and that of our allies will suffer," Murkowski said at an April hearing.

A report from her committee said that the Iran deal, then in the negotiating stages, "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."

Other advocates of increased U.S. oil exports say that lifting sanctions on Iran’s oil sector will give the country regional influence that can be counteracted by allowing American producers to provide an alternative to Iranian crude.

"We need to give our allies another option that won’t result in the funding of terrorist activity in the Middle East and beyond, and the United States has that answer," said Sen. Jim Inhofe (R., Okla.), chairman of the Senate Environment and Public Works Committee, in an emailed statement.

Inhofe introduced legislation in May that would expand U.S. oil production on federal lands. He said the bill would work to counter Iranian influence if sanctions on its oil industry were lifted.

"Nearly 70 percent of the regime’s finances are generated through its oil exports," he said. "This bill will expand global oil production so that no nation will have any need to rely on Iranian oil to fuel their economic growth."

Murkowski and Sen. Heidi Heitkamp (D., N.D.) introduced legislation in May to roll back the oil export ban. Rep. Michael McCaul (R., Texas) has introduced companion legislation in the House. A bill authored by Rep. Joe Barton (R., Texas) would also scrap the ban.

"If the federal government is going to green light Iranian crude oil exports, it should also allow U.S. companies to compete on the world market and let U.S. consumers reap the benefits in the form of lower gasoline prices and new jobs," Baker said in his statement.

Published under: Economy, Iran Nuclear Deal, Oil