1970s replay? Market speculation: Will the U.S. implement an "oil export ban"?

Iran's core gas field has been subjected to military strikes by Israel, causing oil prices to surge suddenly. A policy tool that has been dormant for half a century has resurfaced—will the United States restart the oil export ban? This policy debate, centered around the historical precedent of 1973, is becoming one of the tail risks most concerning to current crude oil market investors.

According to Axios, the export ban was mentioned internally in the White House earlier last week, but it is not currently a priority option; U.S. Energy Secretary Chris Wright publicly stated that there has been "no discussion" within the Trump administration about banning oil exports.

However, the verbal denial has not quelled market vigilance. Goldman Sachs reported on the 17th that clients' concerns about the risks of oil product export restrictions are rising, with the Brent-WTI spread widening by $2.5 over the past seven days—markets are pricing in this potential risk through price signals.

Combined with the current chaos in the Middle East, volatility in the energy market is further amplified. According to CCTV News, on March 18, the Israel Defense Forces attacked facilities related to the South Pars gas field in Iran's southern Bushehr Province, causing Brent crude to spike over 6% during trading, nearing the $110 per barrel mark.

South Pars Attack: Energy War Escalates to New Intensity

The uniqueness of this attack lies in its breaking of a previously untouched red line in this round of conflict. This is the first direct military strike on Iran's upstream oil and gas assets since the outbreak of this round of conflict.

MST Financial analyst Saul Kavonic pointed out the unique destructiveness of such attacks:

If millions of barrels of production capacity are destroyed, the impact will be enormous, as it means that even if the war ends, stocks cannot be replenished.

Directly striking upstream gas fields is fundamentally different from attacking tankers or blocking straits—the former involves blowing up "wells," with repair cycles potentially lasting years, rather than just clearing "pipes."

The Historical Ghost of 1973

Historically, after the 1973 Arab oil embargo, the U.S. Congress implemented an oil export ban against the backdrop of soaring gasoline prices. This ban lasted over 40 years and was only lifted by Congress in 2015.

According to Axios, citing Glenn Schwartz, director of energy policy services at consulting firm Rapidan Energy Group:

When Congress lifted the export ban in 2015, they explicitly reserved this power.

The Goldman Sachs report also noted that the U.S. government currently has the authority to restrict oil exports under IEEPA (International Emergency Economic Powers Act), a tool that is legally available for use. Meanwhile, export restrictions are beginning to emerge globally: China has cut refined oil exports, Thailand has suspended oil exports, and South Korea has implemented caps on fuel exports.

Glenn Schwartz stated:

Currently, export restrictions are not under consideration, but if oil prices surge significantly and remain high, the government will have to consider some unconventional response measures.

Trump himself even hinted on Thursday that higher oil prices might be beneficial for Americans—though this portion of the gains would primarily go to oil companies

Goldman Sachs: The Actual Effect of the Ban May Be Limited, with Significant Side Effects

Even if the export ban is implemented, Goldman Sachs analyzes that its actual effect may fall far short of expectations, and the cost may be substantial.

Regarding crude oil export restrictions, Goldman Sachs clearly points out that the United States is still a net importer of crude oil. Limiting exports will lower WTI prices relative to global benchmarks like Brent, increase domestic crude oil inventories, and ultimately suppress U.S. shale oil production—contrary to the policy intention of stabilizing domestic energy supply.

If restrictions are imposed on crude oil exports, the most immediate impact will be a further decline in WTI prices relative to international benchmark prices (such as Brent). Crude oil trapped within the U.S. will raise domestic inventory levels and ultimately dampen the enthusiasm for U.S. shale oil production.

It is noteworthy that this logic has already begun to be priced into the market—over the past seven days, the spread between WTI and Brent has widened by $2.5, partly reflecting the market's early digestion of concerns over potential export restrictions.

If restrictions are imposed on refined oil exports, the situation becomes more complex, and the impact on consumers in different regions varies significantly.

Goldman Sachs' data shows that the U.S. Gulf Coast (PADD3) is the main net exporter of refined oil, with an average net export volume of 5,183 thousand barrels per day in 2025; while the East Coast (PADD1) is a net importer, with a net import volume of 436 thousand barrels per day.

Once refined oil exports are restricted, refiners on the Gulf Coast will be the first to feel the impact, and local retail fuel prices may come under downward pressure.

For East Coast consumers, whether they can benefit depends on two key premises: first, whether other countries can maintain sufficient export volumes to the U.S. East Coast; second, whether the capacity contraction due to declining refining profits on the Gulf Coast is limited enough that the surplus refined oil can be shipped (for example, in the case of the Jones Act being suspended) to the East Coast. This transmission chain is fraught with uncertainty, and Goldman Sachs admits that the net impact on U.S. consumers is "still unclear."

Glenn Schwartz warns:

Export restrictions will only have a slight and temporary suppressive effect on domestic crude and refined oil prices. Soon, as drillers and refiners reduce activity, domestic prices in the U.S. will rise again.

The Hormuz Dilemma: The True Drivers of Price

The deeper background of the export ban debate is a more fundamental reality constraint: As long as the actual blockade of the Strait of Hormuz continues, there are almost no conditions for a rapid decline in oil prices, and the tools available to Trump are extremely limited.

According to Goldman Sachs' latest data, oil flow through the Strait of Hormuz has decreased by about 98% from normal levels (4-day moving average of about 0.5 mb/d), with total losses in oil flow from the Persian Gulf estimated at 15 mb/d, approximately 15 times the peak loss of Russian oil production in April 2022.

The bypass volume through the Yanbu and Fujairah ports is about 4.6 mb/d, but physical risks remain high—Fujairah port has been attacked five times since the outbreak of war, with three attacks occurring in just the past four days, and loading of tankers has been suspended again

From Tanker Freight to Options Market, Risk Premiums Soar Across the Board

Disruptions in the physical market have left a clear mark on the price system.

European jet fuel prices reached a record high of $215 per barrel at the close on March 16, surpassing Asian jet fuel prices for the first time, reflecting that the risk of refined oil is spreading from the Middle East to Europe.

Middle Eastern crude oil tanker freight has surged to $15 per barrel, three times the pre-war level.

More concerning is that the war risk insurance premium in the Strait of Hormuz has jumped to 5% of the vessel's value, whereas during normal times this ratio is less than 0.1%—a 300-fold increase in insurance costs is enough to indicate that the market's pricing of physical risk has entered an unconventional state.

The options market is also quietly repricing.

The implied probability of Brent crude oil May contracts expiring above $100 per barrel has risen from 15% to 21% in the past five days. Data from the prediction market Polymarket shows that the market believes the highest probability (47%) is that the conflict will end between April 1 and May 15, but the implied probability of the conflict continuing beyond May 15 has risen to 45%—indicating that market confidence in a "quick resolution" is waning, while the pricing weight for a "prolonged conflict" is increasing