Oil prices won’t be affected by US crude exports, according to OPEC’s top official. “The net effect of export of American oil on the market is zero,” Abdalla El-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said Tuesday. “This will have no effect on the price because the US still is an importing country.”
The US Congress is nearing a deal on the biggest shift in the nation’s oil policy in more than a generation by allowing the world’s largest oil and gas producer to sell crude abroad. Pressure has been building to lift the ban as new drilling technologies unlocked reserves in shale formations, pushing output and stockpiles to records while punishing prices.
“They export some, but they need to import the same quantity from somewhere else,” El-Badri said in New Delhi. The USmay export light oil produced from shale formation while still importing heavier types of crude, he said.
Ending the ban
The US restriction on crude exports was established during the energy supply shortages of the 1970s. Senate leaders from both parties were near a deal Monday but faced resistance from House Democrats and some Republicans. House Democrats said they were willing to discuss lifting the trade restrictions, depending on what concessions they would get in exchange, according to a Democratic leadership aide. The US exported a record 586,000 barrels of crude a day in April, more than OPEC members Ecuador and Libya. That dropped to 409,000 barrels a day in September.
Federal law bars companies from sending unrefined crude abroad, with a few exceptions including shipments to Canada.
Saudi Arabia, OPEC’s most-powerful member and the world’s largest oil exporter, shipped about 7.15 million barrels of crude a day in 2014, according to the group’s website.
OPEC decided this month to refrain from cutting output as it attempts to constrain rival producers -- even after a 40 per cent plummet in prices since it first took on the strategy in November last year. The OPEC chief signaled the group has no need to cut production yet, despite the price collapse to the lowest in six years. “We still can produce with the current price,” he said.
Bloomberg
