'NOPEC' bill gains momentum in the US after OPEC+ decision

A US Senate committee is working on a bill that seeks to rein in OPEC+ after its decision to cut oil production. According to Reuters, lawmakers could debate the issue after the 8 November elections.

After the oil organisation announced its decision to cut crude by 2 million barrels per day - the biggest oil supply cut since greater than 2020 - the 'NOPEC' (National Oil Production and Export Cartels Against Oil Cartels Act) bill has gained traction in the United States. Through NOPEC, the Justice Department could file an antitrust lawsuit against OPEC+ for trying to control oil production or intervene in oil prices. 

This would be possible by amending the Sherman Antitrust Act of 1890, "the law used more than a century ago to dismantle John D. Rockefeller's oil empire", recalls Bloomberg's Ari Natter.

But what are the chances of NOPEC becoming law? First, it is worth noting that the bill has broad support in both the Democratic and Republican parties.

Senate Majority Leader Chuck Schumer, a Democrat, said shortly after the OPEC+ decision was announced that they were "looking at every legislative tool to deal with this egregious and deeply cynical action, including the NOPEC bill". 

"What Saudi Arabia has done to help Putin continue to wage his despicable war against Ukraine will long be remembered by Americans," Shumer also said, as reported by Reuters. Relations between Washington and Riyadh have deteriorated markedly after the OPEC+ decision.

Republicans have also shown their support for the bill. Senator Chuck Grassley announced his desire to make the measure an amendment to the upcoming National Defence Authorisation Act, the news agency notes.

"OPEC+ and its partners have ignored President Biden's pleas to increase production, and are now conspiring to cut production and further increase global oil prices," Grassley said in a statement. "We should at least be able to hold them accountable for these unfair prices," he added.

For its part, the White House has said it would consult with Congress on "additional tools" to reduce OPEC+ control over energy prices, a possible support for the bill. 

In contrast, as Bloomberg's Natter notes, the American Petroleum Institute and the US Chamber of Commerce have "strongly" expressed their rejection of NOPEC. Both institutions fear retaliation against US companies abroad should NOPEC become law.

Washington-based consulting firm ClearView Energy Partners has also warned about the consequences of NOPEC. According to the firm - cited by Bloomberg - passing the bill could lead OPEC to "reconsider and abandon its role of 'balancing the market'", leading to "a dramatic sell-off and depletion of global spare capacity".

Already in 2019 Saudi Arabia threatened to sell oil in currencies other than the dollar if the US passed NOPEC. Although this bill has not passed, the House and Senate passed versions of NOPEC in 2007. 

Coordinator Americas: José Antonio Sierra