 |
Louisiana Light • 2 days | 89.15 | -0.01 | -0.01% | ||
|
Bonny Light • 1 day | 90.37 | -1.56 | -1.70% | ||
|
Opec Basket • 2 days | 90.18 | +0.61 | +0.68% | ||
|
Mars US • 167 days | 77.67 | -1.57 | -1.98% | ||
|
Gasoline • 10 mins | 2.705 | -0.024 | -0.86% |
|
Bonny Light • 1 day | 90.37 | -1.56 | -1.70% | ||
|
Girassol • 1 day | 90.93 | -1.38 | -1.49% | ||
|
Opec Basket • 2 days | 90.18 | +0.61 | +0.68% |
|
Peace Sour • 7 hours | 75.35 | -2.68 | -3.43% | ||
|
Light Sour Blend • 7 hours | 78.40 | -2.68 | -3.31% | ||
|
Syncrude Sweet Premium • 7 hours | 85.35 | -2.68 | -3.04% | ||
|
Central Alberta • 7 hours | 75.75 | -2.68 | -3.42% |
|
Eagle Ford • 2 days | 81.84 | -0.05 | -0.06% | ||
|
Oklahoma Sweet • 2 days | 81.75 | +0.00 | +0.00% | ||
|
Kansas Common • 2 days | 75.50 | -0.25 | -0.33% | ||
|
Buena Vista • 6 days | 89.36 | +0.64 | +0.72% |
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Saudi Arabia’s Energy Minister Slams NOPEC Bill And Price Caps
The NOPEC bill, which was recently reintroduced in Congress by a group of legislators, and price caps on oil will only serve to increase instability and uncertainty in oil markets rather than solve any problems.
This is the view of Saudi Energy Minister Abdulaziz bin Salman who spoke with Energy Intelligence.
“The Nopec bill does not recognize the importance of holding spare capacity and the consequences of not holding spare capacity on market stability,” bin Salman said, adding that “Nopec would also undermine investments in oil capacity and will cause global supply to fall severely short of future demand.”
A bipartisan group of U.S. senators earlier this month reintroduced the so-called No Oil Producing and Exporting Cartels bill in a bid to force OPEC+ to lift its self-imposed production cuts.
"The oil cartel and its member countries need to know that we are committed to stopping their anti-competitive behavior," Senator Chuck Grassley, one of the NOPEC backers said, as quoted by Reuters.
If successful, a NOPEC law would make it possible to sue OPEC national oil companies for monopolistic practices. According to bin Salman, the impact of such legislation coming into effect would be felt across the market, by consumers and producers alike, and it will not be a positive impact.
“The same holds for price caps, whether imposed on a country or a group of countries, on oil or any other commodity,” the Saudi energy minister told Energy Intelligence. “This will lead to individual or collective counter-responses with intolerable consequences in the form of massive volatility and instability.”
He then went on to say that if someone imposed price caps on Saudi oil, the Kingdom would shrink production and stop exporting oil to the countries that support the cap, which is exactly the same as Russia is doing with the G7/EU price cap.
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As for oil price caps, he said that they increase instability and uncertainty in the global oil market. He also threatened that if someone imposed price caps on Saudi oil, the Kingdom would shrink production and stop exporting oil to the countries that support the cap exactly as Russia has done with the G7/EU price cap.
However, the threat of the United States using NOPEC to sue OPEC+ for so-called cartel-like practices is no more than hot air. OPEC+ shouldn’t be unduly worried about it.
OPEC+ isn’t a cartel. How could OPEC be a cartel when it was founded as a counterweight against the previous “Seven Sisters” cartel of Western multinational oil companies who were a real cartel dominating every aspect of global oil through price fixing, limiting supplies and suppressing competition for the sole purpose of maximizing its profits? OPEC has never been in such a situation. It only accounts for 70.1% of global proven reserves, 34.7% of the global oil market and 30.8% of exports. The United States and Russia account for 12% each.
If NOPEC becomes a law and the United States tries to sue OPEC+ or any of its members, the organization could stop all its oil exports to the US. NOPEC has only jurisdiction in the United States but no extraterritorial jurisdiction under international law.
If, however, the United States persists with mounting law suits against OPEC+ or its members, then they could retaliate by withdrawing their investments and funds in the US and even replace the petrodollar with the petro-yuan in their oil transactions. That would be the biggest ever retaliation against the US.
Were Saudi-led OPEC to replace the petrodollar with the petro-yuan, this could cause the petrodollar to lose an estimated 21% of its share in the global oil trade.
And with China paying for its 12.0 million barrels a day (mbd) of oil imports in petro-yuan, Russia selling its 8.0 mbd exports of crude and petroleum products in ruble and India paying in rupee for its 5.0 mbd of crude imports, the share of the petrodollar in the global oil trade could plummet by 60%. This will be a mortal blow for the petrodollars and the US financial system on which it depends.
This has recently gained more momentum when Chinese President Xi Jinping speaking at the China-Arab Gulf States Summit during his visit to Riyadh in December demanded that that they accept the petro-yuan for payment for Chinese imported crude from the Gulf States.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert