The Peter Zeihan Podcast Series - U.S. Oil Export Restrictions Coming Soon || Peter Zeihan

Episode Date: July 6, 2026

U.S. Oil Export Restrictions Coming Soon || Peter ZeihanIf global energy supplies remain constrained, the U.S. government will prioritize U.S. consumers over international markets. This would take the form of export restrictions.Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://bit.ly/44DVFsY

Hey, everybody, Peter Zine here, coming to you from Above the Valve at all in New Mexico. We're coming up on Golden Hour, so I'm just going to sit here for a little bit. Anywho, today I am taking a question from the Patreon page, specifically, do I think that the United States government is going to restrict energy exports in order to keep prices under control as the international system basically loses energy? And absolutely, absolutely, absolutely. The question is how there are a few options. none of them are great, and all of them have side effects.

But let's start with the basics. As of the third week of June, we have somewhere between 1 and 1.3 billion barrels of crude that were never produced and delivered. That has drained global inventories to record lows. And even if the strait were to open tomorrow, it's going to be years before Persian Gulf producers can be producing again. So we're going to have to have some demand destruction that will press. probably involve a protracted, sharp price spike, and there is no way that a president is populist

as Donald Trump is going to let that pass without doing something. So two options. The first one, the legal option, is probably the least clean. Back under the Obama administration, Congress granted the president the right to end all oil exports, just by saying so. That would trap the crude in the United States and probably send crude prices in the United States negative because there's just not enough storage. Well, let me back up and take that back a little bit. Storage is running really low in the United States because of what's going on in Iran. So step one would be to fill up all of that storage.

And the question would be whether or not the shale wells, which fall off pretty quick, would fall off before the storage was filled. You see a shale well can be brought online in just a few weeks, but half its lifetime production is produced in the first year. So if it takes, say, three months for the storage to fill up and nobody drills at all during that time, things might work out kind of, kind of? I don't want to ever play that. If not, prices are going to go negative because there's just nowhere to put it.

We had the negative price situation for a while in COVID, if you remember. That was all kinds of fun if you were an oil producer. Anyway, what that does is it floods the system with crude. And if you are a U.S. refiner, you now have basically a bottomless supply of light sweet crude to shove through your refinery and make product. However, U.S. refineries don't like light sweet crude. They were designed for a different world where we imported a lot of cheap, heavy, sulfur-laden crude. Ever since the Shale Revolution really got going back in, say, 2010, I mean, we got our first oil production back in 2007, 2008, and then it just exploded after that. U.S. refineries have been changing their refineries bit by bit by bit, but it's been very slow.

They've been fighting it at every step of the way. And in this circumstance, the ones that have basically been dragging their feet would be hosed because you can damage your refinery if you run the wrong crude through it. And at a minimum, you're going to have a really high refinery loss. Anyway, that'll go for a few weeks. And then we'll see basically an implosion in the shale field, because no, Nobody is going to want to produce if they can't export. A lot of infrastructure is added, especially there in Corpus Christi in the last decade,

to facilitate those exports. And if they go to zero, they go to zero. So probably you're looking at another one, maybe one and a half, maybe if we're really lucky, two million barrels per day of product, of which they will try to make more gasoline and diesel and jet fuel. So that might, might be half of it. But that's it. And everything else that's in the surplus basically gets shut down.

because there's nowhere to send it. So it would give a moderate boost to consumers over the mid and long term. Refinerers would just be besides themselves with the damage to the refineries and producers would go out of business. That's option one. That's the legal option. Option two is to do something to restrict fuel product exports. Right now the United States exports about 5 million barrels per day of refined product, which is more than any other country on the planet has ever even exported of crude. And if you were to do something that it would restrict that and trap that in the country, that would have an immediate effect on prices and an immediate effect on supplies to the global system, just like shutting off oil exports would.

The problem here is that Congress has not granted the presidency that power. And there's a lot of questions as to how you would do it. Probably the most effective would be to just put a really fat export tax on it. I think that would play to Trump's preferential. It would still result in higher prices in the United States, but nothing compared to everywhere else, and we wouldn't have a supply shortage. Anyway, those are the two options. We'll probably find out within a couple of months which one the Trump administration is considering, because we're getting really close.