Iranian oil is one step closer to hitting the world market. Yesterday was “Adoption Day,” marking the official adoption of the Joint Comprehensive Plan of Action (JCPA) as part of the Iran nuclear agreement. This sets the wheels in motion for sanctions on Iran to be lifted, enabling them to soon be able to export oil around the world and gain economic and geopolitical benefits.
“One nation, Japan, plans to triple its imports of Iranian crude once sanctions are lifted, the Iranian Oil Ministry’s Shana news agency said on Saturday, citing Seyed Mohsen Ghamsari, director of international affairs at National Iranian Oil Co. Japan will increase purchases to 350,000 barrels a day from 110,000 barrels, the agency said.”
In addition, North Atlantic Treaty Organization (NATO) members, like Poland, are seeking deals to purchase Iranian crude oil.
The U.S. is the only developed country in the world with a ban on crude oil exports. This puts U.S. companies at a competitive disadvantage by not being able to fairly compete in the international marketplace and constrains a potential source of supply for U.S. allies and trading partners.
Studies and reports have highlighted how Iranian oil exports will cause significant impacts to U.S. oil production. The Energy Information Administration (EIA) predicted that Iran will increase crude oil production by 600,000 bpd by the end of 2016. Because other OPEC countries have not indicated that they will cut production, EIA projects that this would cause a 400,000 bpd reduction in U.S. crude oil production. This would lead to additional U.S. job losses.
Iran’s likely re-entrance into the global market is also a reminder of why the U.S. crude oil export ban is a significant economic, national security and geopolitical issue. Allies and trading partners, who are requesting U.S. oil, are left with no choice but to turn to countries like Iran and Russia for supplies.
The House of Representatives, recognizing the economic and national security benefits of U.S. crude oil exports, recently passed bipartisan legislation (H.R. 702) to end current restrictions. The bill would encourage U.S. competitiveness and level the playing field for U.S. companies looking to freely trade their product across the world. It would also strengthen national security by giving U.S. allies and trading partners a safe, reliable supply of oil.
If Iran can export crude oil, there’s no reason why U.S. companies and workers should not have the same opportunities.