Recently Biden has hurled the major mediation into energy markets of the decade. While Big Oil is worried he’s not almost completed yet.
Democrats have been asking Biden for weeks to ban US oil companies to from exporting oil overseas. In spite of the stress from policymakers in his party, President Joe Biden has so far abstained from enforcing banning oil ships.
According to Mike Sommers, CEO of American Petroleum Institute (API) the dominant oil & gas trade group is considering the menace of an oil export ban earnestly.
During a conversation in his Washington office, Sommers stated that we’re rationalizing all of our powers as we are trying to do everything we can.
He further cautioned that an export ban may not be necessarily go as planned for US drivers by raising the prices at the pump, it would help overseas creators by enhancing their profits along with market share.
Banning US Oil Exports: API CEO Opinion
API CEO told that it could prove to be a gift to the Organization of the Petroleum Exporting Countries (OPEC) and Putin Vladimir (Russian President). Calling it an oil shock worldwide.
Various Congressional Democrats compelled President Joe Biden to put ban on oil export to address high gas prices.
The lawmakers and policymaker wrote a letter to Joe Biden that reads— by putting ban on United State oil export, domestic supply can be increased while putting downward pressure on oil prices for the sake of American families.
While as per the Sommers opinion, implementing an oil export ban may cause petrol prices go higher, instead of decrease. He also added that oil is one of the internationally traded product and the international market depend on 3 million barrels per day of American exports. And oil export ban can lead to an oil shock globally.
Pressure on the White House to stop oil exports has been decreased because petrol prices have risen quickly.
Oil prices after staying at $85 a barrel, dropped to nearly $65 a barrel recently. The selloff initiated in expectancy of the harmonized announcement of planned assets by the US, China and other countries. Prices fell even more due to the fright of the Omicron variant would indent oil demand.
But the question is does oil export ban make any sense?
Of course, the American Petroleum Institute (API) is the main United States trade organization for the oil and natural gas industry and it is barely an independent opinion on oil exports. It’s very much in the However various trade group has vested financial interests to protect oil exports — resulting in a contribution to the profits of API associates that also include ExxonMobil (XOM) and Chevron (CVX).
According to a number of industry experts banning American oil exports will drive United States oil prices down while on the other hand it would raise the price of Brent crude (the global benchmark) at the same time. And that’s problematic because petrol is priced off Brent Crude not West Texas Intermediate (WTI).
Brent Crude rates would probably rise up quickly because the oil market globally would fail to get approximately three million barrels of oil supply.
However, the Director of API has stated that the trade group is at work with Democrats (who are in Congress) to talk to the White House this is a really bad idea.
Sommers further said about the impact of President Joe Biden’s plan to pat the Strategic Petroleum Reserve, by saying it as a drop in the bucket.
President Joe Biden’s administration has released 50-million-barrel which is the biggest in United States history.
Though the oil market could experience a short lived glitch from the Strategic Petroleum Reserve (SPR) release. However rallying demand and supply restraints propose that we’re going to constantly see high petrol prices, Sommers said.