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Oil at 4-year high sparks renewed interest in Bill allowing US to sue OPEC

The bill would change US antitrust law to allow OPEC producers to be sued for collusion; it would make it illegal to restrain oil or gas production or set those prices

Reuters  |  New York/Dubai 

Opec, crude oil

With prices hitting fresh four-year highs, long-dormant proposals to allow the to sue nations are getting a fresh look in Congress, though they were once considered a longshot to becoming law.

A US Senate subcommittee on Wednesday will hear testimony on the so-called No Producing and Exporting Cartels Act, or NOPEC, which would revoke the sovereign immunity that has long shielded members from US legal action.

The bill would change US to allow producers to be sued for collusion; it would make it illegal to restrain or or set those prices - removing sovereign immunity that US courts have ruled exists under current law.

Past US leaders have opposed the bill, but the possibility of its success may have increased due to Donald Trump's frequent criticism of the Organization of the Petroleum Exporting Countries, and as some predict that Brent crude, the benchmark, could reach $100 a barrel before long.

"OPEC is a pet peeve for him," said Joe McMonigle, policy analyst at Hedgeye "Everybody thinks he could easily support "

is lobbying the US government to prevent the bill's passage, sources familiar with the matter said. Business groups and oil companies also oppose the bill, citing the possibility of retaliation from other countries.

OPEC controls output from member nations by setting production targets. Prices are up 82 per cent following the cartel's decision to cut output at the end of 2016, hitting $84 a barrel on Monday, and lawmakers have trained their ire on the group, saying it is again harming consumers and represents interference in free markets.

Wednesday's hearing before the Senate Subcommittee on Antitrust, could give insight into the executive branch's stance, McMonigle said. One of the witnesses will be Makan Delrahim, for the Justice Department's Antitrust Division, who has written in support of such legislation.

A version of passed both houses of in 2007 but was shelved after said he would veto the legislation. Chances of passage this year are slim, as the US House of Representatives is scheduled to be in session only 16 days the rest of this year, leaving little time for anything but must-do legislation like keeping the government funded.

Saudi Arabia, the world's top oil exporter, is worried that NOPEC could turn into another Justice Against Sponsors of Terrorism Act (JASTA) law, which allows victims of the Sept. 11 attacks in the to sue Riyadh, the sources said. The JASTA law is seen as key to why state-run was hesitant in publicly listing its shares on US markets in an IPO that has since been shelved.

With close to $1 trillion in investments in the United States, Riyadh has a lot to lose if NOPEC becomes law. Saudi Minister raised concerns about it with US officials, including US Secretary Rick Perry, during private meetings in recent months, two sources told on condition of anonymity.

Earlier this year, the and told they opposed the bill, saying surging US had mitigated OPEC's influence.

Since the US renewed sanctions on this May, other nations, including Saudi Arabia, have agreed to increase production. However, that has not yet stopped oil's upward climb.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, October 02 2018. 10:31 IST