New York, USA (CNN)–A failed decades-old effort by US politicians to break the throttle of a few countries has found new life in the oil market as the war in Ukraine pushed prices to their highest level in 14 years.
A US Senate committee on Thursday passed a bill that would expose the Organization of the Petroleum Exporting Countries (OPEC) and its partners – most notably Russia – to lawsuits for complicity in boosting oil prices. The vote took place just hours following the “cartel” and its allies once once more rejected the West’s requests and stuck to plans for a modest increase in production.
To become law, the bill must pass in its entirety in the Senate and the House of Representatives, and then be signed by the president. White House spokeswoman Jen Psaki said the administration had concerns regarding the “potential ramifications and unintended consequences” of the legislation. She said the White House was still studying the bill.
The bipartisan bill, the “No Oil Production and Export Act of 2021,” or NOPEC, would strip OPEC and its national oil companies of the sovereign immunity that has protected them from lawsuits for decades. This means that the oil states will no longer enjoy immunity from the authority of the US courts if they violate the provisions of the bill if it becomes law.
The Biden administration struggled to control oil prices following Russia’s invasion of Ukraine disrupted energy markets and raised inflation at home. Western sanctions and a possible European Union embargo on Russian oil threaten to leave a gap in the market that might aggravate the situation. With the midterm elections due in November approaching, the window for cooling inflation is narrowing for the president.
A CNN poll released Wednesday showed that a majority of Americans believe Biden’s policies have hurt the economy, while 8 in 10 said the government isn’t doing enough to combat inflation.
Only Saudi Arabia and the United Arab Emirates have the spare capacity needed to stave off any shocks caused by the Russian shortage. OPEC members refused to increase production dramatically, opting instead to stick to a series of gradual production increases agreed with Russia.
Frustrated with Riyadh’s refusal to respond to US calls for more oil, politicians from the president’s own party are pushing to take a tougher line with Riyadh. Last month, nearly 36 House Democrats called on Biden to “recalibrate” the relationship with Saudi Arabia, calling it a bad strategic partner, according to some reports.
“We are not students to be treated like a carrot and a stick,” Saudi Prince Turki al-Faisal said in a recent interview. He blamed private US energy policies for the “state they are in”.
Robin Mills, founder and CEO of Qamar Energy in Dubai, said that while the NOPEC bill had unsuccessfully tried to force its way through Congress before, the landscape today is very different.
Mills told CNN why US politicians are making a new attempt to crush OPEC:
How is this attempt different from previous attempts?
There have been various versions of this law since 2000, and it emerges whenever oil prices rise. It never passed. This time, in the government, he gained more momentum, in part around Russia.
Biden is also under political pressure due to inflation. There are some political points on which OPEC can be held responsible for the high oil levels.
How have Saudi Arabia and other OPEC countries responded to such attempts in the past?
They always put pressure on him, and they will press once more. I’m not sure how much they can put pressure on right now. They’re not particularly popular in Washington right now, but they have their own lobbies.
There’s the American Petroleum Lobby, too, API [معهد البترول الأمريكي] And other organizations that have usually opposed this law because they benefit from OPEC restricting production and keeping prices high. So they tend to oppose this law on the ground.
In your opinion, how will the oil-producing countries respond to the bill?
I don’t think Middle Eastern countries can continue to restrict production and refuse to play the game. They can be more cooperative and agree to increase production [لكن] They don’t want to be seen doing so under pressure. The EU ban on Russian oil imports will take some time to take effect [لذلك] OPEC and OPEC+ might have a few more months until it becomes clear that there is a shortage of oil, and that gives them reason to say, “Okay, we’ll increase production and address that gap.” So they can do so as a measure of the market without appearing to be under political pressure.
How likely is this law to pass the Senate and House of Representatives? Is there a possibility that Biden will pass it as well?
Having another card to play would be attractive to management, even if they don’t let it go all the way. The NOPEC law is an additional element at a time when the United States does not have that many cards to play [ضد منتجي النفط]. Many of these laws have been put forward in the past, and there are always some national security arguments that [الدول المنتجة للنفط] They are our allies, and we do not want to disturb our relations with them, and they are important to the oil market. But this time there are some elements that might give him a better chance.
will have to [بايدن] Either let Qanz pass, or he should say, “I vetoed something because the Saudis agreed to something for us.” [مثل] Agree to increase production or something. He mightn’t object to it without reason because that was just another weapon once morest him.
Failure to use the veto would be viewed by Saudi Arabia and other producers as an outright hostile move.
Could the passage of this law have a detrimental effect on the United States itself?
Recovering prices have been very good for the US oil industry. But practically there is not much spare capacity [في الولايات المتحدة]. Even if Saudi Arabia and the UAE use all their spare capacity, the market is still very tight, and with Russia out, the market will get tighter.
