The United States plays a significant role in the world oil market, not only as the top consumer of crude oil and petroleum products, but also as the largest producer. Despite the recent surge in U.S. oil production, the United States remained a net importer of oil in 2018. Congress may consider policies that affect the world oil market, including sanctions, alternative fuel standards, emission controls, use of electric vehicles, and protection of international trade routes. The United States, both the top oil producer and the world's greatest consumer of crude oil and petroleum products (e.g., gasoline), remains a net oil importer. U.S. Demand

The United States is the number one consumer of crude oil and refined petroleum products such as gasoline, diesel fuel, and aviation fuel. The pricing of crude oil contributes to the price consumers pay for petroleum products in the United States. Gasoline, for example, closely follows the trends in WTI and Brent. Following the 1973 Organization of Arab Petroleum Exporting Countries (OAPEC) oil embargo, Congress passed the Energy Policy and Conservation Act of 1975 (EPCA; P.L. The EPCA, among many other things, restricted U.S. produced crude oil exports. 114-113 ), which repealed Section 103 of the EPCA ( P.L. 94-163 ), removing any restrictions to crude oil exports. World Oil Market

In general, the world oil market determines the price and supply of oil and petroleum products for U.S. consumers, which may impact policy decisions by Congress. As developing economies grow, so too does their demand for fuel and consumer goods, including paints, lubricants, and plastics—many dependent on crude oil. Supply generally does not follow demand smoothly, and this results in price volatility. National oil companies (NOCs) dominate Russian and Saudi Arabian oil production. NOCs operate under government ownership or are companies under influence by national governments. Saudi Arabia, historically the world's leading oil producer and a member of OPEC, has held enough spare capacity to influence the market when it has deemed it necessary. OPEC, through crude oil policy decisions, can influence the world's oil supply and as a result crude oil prices. The IEA projects China and India to contribute to a large portion of oil demand growth, representing around 20% of total world demand. Several forecasts estimate that the transportation sector will continue to dominate oil demand. World Prices and Factors

Oil prices in the world market are determined fundamentally by supply and demand, which in turn depend on a number of other factors, such as currency exchange rates, the condition of the world economy, investments, and political environments. Oil policy can be influential in a number of ways, for instance as a response to or in anticipation of undesirable international behavior or as a means to bring balance and stability to an otherwise volatile market. The United States plays a multifaceted role in the world oil market, which may affect Congress's policy decisions. OPEC, especially in conjunction with other major producers (e.g., Russia), can exert a greater influence. Several bills introduced in the 115 th Congress addressed the U.S. relationship with OPEC, including the United States Commission on the Organization of Petroleum Exporting Countries Act of 2017 ( H.R. 545 ); the OPEC Accountability Act of 2018 ( S. 2929 ); and the No Oil Producing and Exporting Cartels (NOPEC) Act of 2018 ( H.R. 5904 and S. 3214 . Protection of Trade Routes

While the oil market has changed in the past 40 years, physical threats to oil supply still exist, particularly along certain trade routes. Roughly 24% of the world oil market, almost 22 Mb/d of crude oil and petroleum products, transited the Strait of Hormuz in the first half of 2018. Despite a new era of abundance for the United States, a massive disruption to world supply along trade routes could permeate into geopolitical relationships, secondary industries (e.g., petrochemicals, agriculture), and the economy at large. Largely in response to the OAPEC oil embargo and exhausted U.S. spare capacity, Congress considered security-of-supply policy options. Since then, Congress has continuously demonstrated interest in the oil market. Renewable Fuel Standard

In 2005, Congress established the Renewable Fuel Standard (RFS) with the passage of the Energy Policy Act ( P.L. Other major policy considerations could include international trade policies, infrastructure, diversification of transportation fuels, and funding in research and development.
The United States, as the largest consumer and producer of oil, plays a major role in the world market. Policy decisions can affect the price of oil and petroleum products (e.g., gasoline) for U.S. consumers and companies operating in U.S. oil production, transportation, and refining sectors. Congress considers policies that can affect the world oil market, including trade, sanctions, protection of trade routes, the Strategic Petroleum Reserve (SPR), and alternative fuel standards.
Technological advancements, supportive policies, and other aspects of the U.S. oil industry have reversed a multidecade downward trend in U.S. oil production. In 2018, U.S. oil production nearly doubled compared to 2008. The United States is also the number one consumer of crude oil and refined petroleum products in the world. The pricing of crude oil contributes to the price consumers pay for petroleum products in the United States.
Congress has maintained an interest in oil policy. Following the 1973 Organization of Arab Petroleum Exporting Countries (OAPEC) oil embargo, Congress passed the Energy Policy and Conservation Act of 1975 (EPCA; P.L. 94-163). In response to rapid price escalation and perceived scarcity, the EPCA, among many other things, restricted U.S. produced crude oil exports. As the oil sector evolved, Congress has amended the EPCA. The Consolidated Appropriations Act, 2016 (P.L. 114-113) repealed Section 103 of the EPCA removing any restrictions to crude oil exports.
Supply, demand, price, and other factors all combine and interact with one another to create the world oil market. Saudi Arabia, historically, has been the world's leading oil producer and along with the Organization of the Petroleum Exporting Counties (OPEC) has held enough spare capacity to influence global oil supply and prices. World oil demand typically follows world economic conditions. Oil prices are set in the world market and are primarily a function of supply and demand fundamentals, but also a number of other factors, such as quality, location, and transport infrastructure availability (e.g., pipelines). While the world oil market historically follows the world economy, supply generally does not follow demand smoothly and this results in price volatility. As economies grow, so too does the demand for crude oil and petroleum products, including fuels, paints, lubricants, and plastics. China and India are forecasted by the International Energy Agency (IEA) to contribute a large portion of oil demand growth, representing around 20% of total world demand by 2023. Asia, by IEA's forecast, will remain a net importer of crude oil through 2023.
Oil policy can be influential as a response to or in anticipation of undesirable international behavior or as a means to bring balance and stability to an otherwise volatile market. OPEC, especially in conjunction with other major producers (e.g., Russia), can exert influence on the oil market. Several bills introduced in the 115th Congress addressed the U.S. relationship with OPEC, such as the No Oil Producing and Exporting Cartels (NOPEC) Act of 2018 (H.R. 5904 and S. 3214). The United States has utilized the oil market as a political tool. National oil companies (NOCs) operate under government ownership or are companies under influence by national governments. The United States, by placing sanctions on crude oil and crude oil-related industries, can send a message to those governments (e.g., Iran). Physical threats to oil supply still exist, particularly along certain trade routes. For instance, roughly 24% of the world oil market transited the Strait of Hormuz in the first half of 2018. A disruption to world supply along trade routes could permeate into geopolitical relationships, secondary industries (e.g., petrochemicals, agriculture), and the economy at large.
The United States plays a multifaceted role in the world oil market, which may affect policy decisions for Congress. Congress has in the past enacted legislation to promote a stable, reliable supply of oil. For example, the EPCA created the SPR and established the Corporate Average Fuel Economy (CAFE) standard for vehicles, in part, as strategies to reduce U.S. exposure to future supply disruptions. Additionally, Congress has enacted legislation to diversify transportation fuels, including tax credits for electric vehicles and the Renewable Fuel Standard. As the oil market continues to evolve, Congress may want to consider these and other major policy options that could include international trade policies, infrastructure, diversification of transportation fuels, and funding in research and development.