His explanation for the delay came as lawmakers race to cut a deal to avoid a shutdown before the federal government runs out of money Wednesday.
"We've made very clear to Republicans that if they want this -- (lifting) an oil export ban -- there must be included in this policies to reduce our carbon emissions and encourage use of renewable energy," Reid said in a floor speech, effectively moving the negotiations into the public after weeks of closed-door talks.
Reid said Republicans should either accept the environmental proposals Democrats want in return for lifting the ban or drop the oil export issue and move the spending package without it. He cautioned that Congress could work over Christmas if the issue wasn't resolved.
Meanwhile, the No. 2 House Democrat, Rep. Steny Hoyer of Maryland, said at his weekly meeting on Tuesday with reporters on Capitol Hill that he didn't expect the spending bill to include a provision increasing the vetting of refugees from Syria and Iraq.
House conservatives have been pressing GOP leaders to attach such language to the funding agreement, and if it isn't included it could complicate efforts by House Speaker Paul Ryan to get support from those on the right of the GOP conference. Democratic leaders have made it clear during negotiations that the provision was a non-starter for them, and Republican leaders have already acknowledged that they need the support of Democrats to pass the package.
Intensive talks on the spending package have been underway for weeks, with lawmakers hoping to clear it by the end of the week so they can go home for the holidays. Legislators and aides have been tight-lipped about why the talks, which many thought would be concluded last week, have failed to reach a conclusion.
Many Republicans, especially from states that produce oil, have pushed to lift the ban, which was put in place during the Middle East oil crisis of the 1970s in an effort to preserve U.S. domestic supplies at a time when American faced a severe shortage.
But Democrats have concerns with lifting the ban for a variety of reasons, including the environmental impact and the potential effect on home heating prices.
Reid spoke just after his counterpart, Senate Majority Leader Mitch McConnell, said progress was being made towards a deal. McConnell did not mention the standoff over oil exports.
Earlier Tuesday, Ryan said he expected a deal to be reached later in the day, with final votes possible in the House and Senate by Thursday. Democrats' pushback on this issue could put that timetable in doubt.
Ryan admitted that Congress would need another short-term spending bill because federal agencies run out of money Wednesday at midnight, and negotiators need more time to avoid a shutdown.