A U.S. Senate subcommittee on Wednesday will hear testimony on
the so-called No Oil Producing and Exporting Cartels Act, or
NOPEC, which would revoke the sovereign immunity that has long
shielded OPEC members from U.S. legal action.
The bill would change U.S. 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 - removing sovereign
immunity that U.S. courts have ruled exists under current law.
Past U.S. leaders have opposed the NOPEC bill, but the
possibility of its success may have increased due to President
Donald Trump's frequent criticism of the Organization of the
Petroleum Exporting Countries, and as some predict that Brent
crude, the international benchmark, could reach $100 a barrel
before long.
"OPEC is a pet peeve for him," said Joe McMonigle, senior energy
policy analyst at Hedgeye Potomac Research. "Everybody thinks he
could easily support NOPEC."
Saudi Arabia is lobbying the U.S. 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 percent 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,
Competition Policy and Consumer Rights could give insight into
the executive branch's stance, McMonigle said. One of the
witnesses will be Makan Delrahim, assistant attorney general for
the Justice Department's Antitrust Division, who has written in
support of such legislation.
A version of NOPEC passed both houses of Congress in 2007 but
was shelved after President George W. Bush said he would veto
the legislation. Chances of passage this year are slim, as the
U.S. 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 United States to sue Riyadh, the sources said.
The JASTA law is seen as key to why state-run Saudi Aramco was
hesitant in publicly listing its shares on U.S. 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 Energy
Minister Khalid al-Falih raised concerns about it with U.S.
officials, including U.S. Energy Secretary Rick Perry, during
private meetings in recent months, two sources told Reuters on
condition of anonymity.
Earlier this year, the U.S. Chamber of Commerce and American
Petroleum Institute told Congress they opposed the bill, saying
surging U.S. energy output had mitigated OPEC's influence.
Since the U.S. renewed sanctions on Iran this May, other
nations, including Saudi Arabia, have agreed to increase
production. However, that has not yet stopped oil's upward
climb.
(Reporting by Stephanie Kelly in New York and Rania el Gamal in
Dubai; Editing by David Gaffen and Tom Brown)
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