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A Senate committee in the United States is poised to endorse a bill that would expose members of the Organization of Petroleum Exporting Countries ('OPEC') and their allies to antitrust charges if they cooperatively restrict oil supplies, causing global crude prices to rise.
The No Oil Producing and Exporting Cartels Act ('NOPEC') aims to safeguard American consumers and companies from artificially inflated gasoline and heating oil prices.
If enacted into law, the bill would amend US antitrust law to remove OPEC's long-held sovereign immunity. This would give the US attorney general the power to sue the cartel and its members. Other producers, such as Russia, which collaborates with OPEC in the OPEC+ group, might be sued as well.
According to some analysts, implementing the bill could have some potentially hazardous and unexpected consequences. To begin with, it's unclear how a federal court could enforce antitrust findings against a foreign country. Second, other countries may take similar action against the US based on similar circumstances, such as the US withholding agricultural output to support domestic farming.
OPEC countries could possibly retaliate in other ways.
Saudi Arabia, for example, threatened to sell its oil in non-dollar currencies if Washington passed a version of the NOPEC bill in 2019. This would jeopardize the dollar's position as the world's reserve currency.
Furthermore, OPEC members might restrict US investment in their nations or simply raise their prices for oil sold to the US, undermining the bill's main goal.
The American Petroleum Institute, the country's main oil lobbying group, has also spoken out against the NOPEC measure, claiming that it will harm domestic oil and gas companies. According to this group, the legislation might lead to OPEC overproduction and lower prices, making it impossible for US energy businesses to increase output. This might reduce drilling activity in the United States, jeopardizing both domestic energy security and its economic recovery.
