The ban on US crude oil exports has recently become a particularly hot button issue, with Iran, the Islamic State and the conflict in Ukraine adding increased geopolitical importance to energy and petrodollars.
But as a Democratic member of the Senate Banking Committee on Tuesday teased out of a Republican witness, the impact of any reversal is at the mercy of Tehran’s foremost regional adversary—a country that moved to harm global competitors last year by drastically upping its output.
“I have already argued that lifting the export ban would have a very modest impact. Something on the order of $2 to $3 per barrel” American Enterprise Institute scholar Benjamin Zycher said. “The Saudis can affect the price more than that if they choose to do so.”
“I agree with you,” Sen. Jack Reed (D-R.I.), replied.
“It seems to me, over the last several few years, they’ve cut back their production in a rather significant way,” he had said, “and oil prices at the pump today are $2.54 or so. And I remember being yelled at a couple of years ago, when the prices were much higher.”
“The one factor that many people point to is the Saudis, for political reasons, have decided that they don’t want access to any oil benefits,” Reed added.
In February, Dallas Federal Reserve President Richard Fisher said that the Saudis “engineered” the $50 per barrel drop in oil prices in the second half of 2014.
Saudi royal family member and billionaire investor Prince Alwaleed bin Tal had denied the theory in January, but said that “there’s a positive side effect, whereby at a certain price, we will see how many shale oil production companies run out of business.”
