Context: The No Oil Producing and Exporting Cartels (NOPEC) bill, which passed a Senate committee recently, is intended to protect U.S. consumers and businesses from engineered oil spikes.
About NOPEC bill:
- The bipartisan NOPEC bill would tweak U.S. antitrust law to revoke the sovereign immunity that has protected OPEC+ members and their national oil companies from lawsuits.
- If signed into law, the U.S. attorney general would gain the option to sue the oil cartel or its members, such as Saudi Arabia, in federal court.
- It is unclear exactly how a federal court could enforce judicial antitrust decisions against a foreign nation.
- Previous versions of the NOPEC bill have failed amid resistance by oil industry groups, including the top U.S. oil lobby group, the American Petroleum Institute (API).
Concerns about the bill:
- One industry concern is that NOPEC legislation could ultimately lead to overproduction by OPEC, bringing prices so low that U.S. energy companies have difficulty boosting output.
- Saudi Arabia and other OPEC countries have some of the world’s cheapest and easiest reserves to produce.
- A wave of oil from OPEC producers, even at a time of concerns about Russian supply could chill U.S. drillers, some of which are already reluctant to boost output despite the cut.
- Some analysts have said that NOPEC could lead to unintended blowback, including the possibility that other countries could take similar action on the United States for withholding agricultural output to support domestic farming, for example.
- OPEC nations could also strike back in other ways.
- In 2019, for example, Saudi Arabia threatened to sell its oil in currencies other than the dollar if Washington passed a version of the NOPEC bill.
- Doing so would undermine the dollar’s status as the world’s main reserve currency, reduce Washington’s clout in global trade, and weaken its ability to enforce sanctions on nation-states.
- The kingdom could also decide to buy at least some weapons from countries other than the United States, hitting a lucrative business for U.S. defense contractors.
- The kingdom and other oil producers could limit U.S. investments in their countries or simply raise their prices for oil sold into the United States – undermining the basic aim of the bill.
MUST READ: OPEC+ Countries
Source: Indian Express