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OPEC Tells Members Not To Mention Oil Price To Avoid U.S. Legal Risk

OPEC flag

OPEC has urged all its members not to mention specific oil prices, to instead stick to the ‘market stability’ narrative in public comments about oil policies to avoid the risk of potential U.S. antitrust lawsuits for manipulating the market if the United States passes a proposed legislation, Reuters reported on Wednesday, citing sources close to OPEC.

The proposed U.S. legislation—the so-called No Oil Producing and Exporting Cartels (NOPEC) Act—could pave the way to antitrust lawsuits in the U.S. against the cartel and its national oil companies, if passed.

Forms of antitrust legislation aimed at OPEC were discussed at various times under Presidents George W. Bush and Barack Obama, but they both threatened to veto such legislation.

In May this year, the NOPEC Act was introduced again. Such legislation would make OPEC subject to antitrust law by removing a state immunity shield created by judicial precedent.

Given President Trump’s continued criticism of OPEC and the way the cartel manipulates the oil market and prices, OPEC members are concerned that the legislation may pass this time around.

Last month, Saudi Arabia—OPEC’s largest producer and de facto leader— hired former U.S. Solicitor General Ted Olson, now partner in law firm Gibson, Dunn & Crutcher LLP, to lobby against the proposed NOPEC bill.

Related: U.S. Oil Production May Jump To 14 Million Bpd By 2020

In July this year, senior OPEC officials gathered in Vienna to discuss the NOPEC bill with international law firm White & Case, and the law firm advised refraining from mentioning oil price in public discussions, two sources familiar with the matter told Reuters.

OPEC also sent a letter on August 1 to the ministers of the member states, urging them to avoid referring to oil price when discussing oil policy, which is a break from past practices, when Saudi Arabia would usually point to a preferred price of oil.

“I would like to call upon OPEC Member Countries, as well as our participating Non-OPEC colleagues, to refrain from any reference to prices in their commentary about our collective efforts or oil market condition,” UAE Energy Minister Suhail Al Mazrouei, who holds the rotating OPEC presidency this year, wrote in the letter seen by Reuters.

“We solemnly believe that market stability, and not prices, is the common objective of our actions,” he says.

By Tsvetana Paraskova for Oilprice.com

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  • Lukas F. Olsnes-Lea on October 17 2018 said:
    Important

    Oil price predictions may be done in simple and reliable terms by OR-gate testing:
    Testing char. string: "Is the oil price, Nymex, 70 US dollars in 2 months time?" and the variations as long as the eye can see, also systematic computer algorithms. For you to check out!

    See (advanced/"advanced") Quantum Computing.
  • Mamdouh G Salameh on October 17 2018 said:
    OPEC was founded in 1960 to defend the interests of its members and that means ensuring stability of the global oil market and prices and also ensuring that OPEC members get an oil price remunerative enough to enable them to support their economies and expand oil production capacity to meet future global demand.

    The overwhelming majority of OPEC members need an oil price of $100 a barrel to balance their budgets. Moreover, a price of $100 is good for the global economy in that it invigorates the three biggest chunks of the global economy, namely the economies of the oil-producing countries, the global oil industry and global investments.

    It is, therefore, ludicrous for OPEC to ask its members to refrain from referring to oil prices when discussing oil policy so as to avoid the risk of potential US antitrust lawsuits against them for alleged manipulating the market if the United States passes a proposed legislation - the so-called No Oil Producing and Exporting Cartels (NOPEC) Act—that could pave the way to antitrust lawsuits in the US against OPEC cartel and its national oil companies.

    I say it is ludicrous because it is like asking somebody discussing his diet with his doctor to refrain from referring to food.

    In May this year, the NOPEC Act was introduced again. Such legislation would make OPEC subject to antitrust law by removing a state immunity shield created by judicial precedent. And with President Trump’s continued criticism of OPEC, OPEC members are concerned that the legislation may pass this time around.

    Still, OPEC should not be unduly worried about the NOPEC Act. It has enough muscle to retaliate against the US. Were the United States to mount a lawsuit against OPEC, the organization could stop all its oil imports to the US and even cut its oil production to force prices up. This will harm the US economy most being the world’s largest consumer of crude oil.

    A case in point is Saudi Arabia’s threat to retaliate against any US punishment regarding the Saudi journalist’s disappearance and possible murder in the Saudi consulate in Istanbul. President Trump took the Saudi threat seriously enough to start back tracking on his threat of severe punishment on Saudi Arabia by floating the idea that “rogue killers” might have been behind the murder of the Saudi journalist.

    Another measure OPEC and Saudi Arabia could take against the United States is to replace the petrodollar with the petro-yuan in their oil transactions. That would be the biggest ever retaliation against the US.

    Furthermore, OPEC members and the whole world know that it is the US which is breaking its own antitrust laws by manipulating oil prices and the global oil market by claims about significant rises of US oil output and a build of US crude and product inventories and also through alternating the value of the US dollar.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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