Trump administration “still studying” NOPEC legislation: US official
Experts did not expect the legislation to pass given few days left for Congress in session
Despite US President Donald Trump’s repeated attacks on the Organisation of the Petroleum Exporting Countries (OPEC), his administration has not made up its mind yet on legislation that would punish the group by allowing legal action against it.
Following a hearing in Congress on Wednesday, Makan Delrahim, assistant attorney general at the Department of Justice, told reporters that the administration is still studying the “No Oil Producing and Exporting Cartels Act” (NOPEC) which would allow legal action against OPEC over adjusting prices and production.
The bill, which is co-sponsored by four high-ranking Republican and Democratic senators, removes sovereign immunity from OPEC.
The bill would make it illegal "to limit the production or distribution of oil, natural gas, or any other petroleum product; to set or maintain the price of oil, natural gas, or any petroleum product; or to otherwise take any action in restraint of trade for oil, natural gas, or any petroleum product.” If these grounds were established, the US attorney general could file legal action against OPEC or members in question.
While the debate around NOPEC is not new, with a version of it passing Congress in 2007 only to be blocked by former President George W Bush, this time NOPEC could find willing sponsors in the White House.
In the last few weeks at campaign rallies, on Twitter and even at the United Nations General Assembly, Donald Trump made a habit of going after OPEC as oil prices hit an $84 high this week.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Mr Trump tweeted few days ago.
Ellen Wald, an energy expert and President of Transversal Consulting, said the US-OPEC tension is “a reflection Mr Trump's Iran policy” supported by Saudi Arabia and other Gulf states. As oil-targeted sanctions snap back on Iran on November 4, the US “is working to remove Iranian oil from the global market and, in doing so, has pushed up the price”.
“In his [Trump’s] mind, whether or not OPEC and Saudi Arabia see the global market as "well supplied" is irrelevant," Ms Wald told The National.
"He wants OPEC to do whatever it has to in order to push the price of oil down."
Mr Trump called Saudi King Salman bin Abdul Aziz to urge more supplies on Saturday, and both energy Secretary Rick Perry and US Secretary of State Mike Pompeo have met their Saudi counterparts Khalid Al Faleh and Adel Al Jubeir to discuss the issue in the last month.
From their perspective, members of the oil cartel are “keeping with their obligations to OPEC and should satisfy the market” said Ms Wald. “The problem is that the market either doesn't believe that Saudi Arabia and other Gulf producers have the capacity or have the will to use their capacity to compensate for the loss of Iranian oil.”
NOPEC is one of three pieces of anti-OPEC legislation being debated currently in Congress. Firas Maksad, the director of the Arabia Foundation, said “it is hardly surprising that American lawmakers would target OPEC in the lead up to congressional elections [on November 6] at a time when oil prices are steadily trending upward.”
Mr Maksad told The National that the bipartisan support behind the bills is simply because “pain at the pump does not know the difference between democrat or republican.” He noted, however, Saudi efforts to increase supplies. “Crown Prince Mohammed bin Salman visited Kuwait this week, looking to add 500,000 barrels per day of spare capacity from a jointly administered neutral zone.”
While Mr Trump could sign a NOPEC bill if it passes Congress, neither Ms Wald nor Mr Maksad expect such an outcome. With less than a total of two weeks left for Congress in session this year there may not enough time to get the bill out of the assigned committees.
Updated: October 5, 2018 01:42 AM