How Saudi Arabia and the US Oil Lobby Are Pressing to Block the NOPEC Law in Congress

The United States and Western countries are still seeking to confront and limit the influence of the Organization of the Petroleum Exporting Countries (OPEC), after its importance as a weapon appeared, and its use against them during the October 6 war in 1973.

At that time, Saudi Arabia, along with the Gulf states, cut off crude supplies to the West, because of its support for ‘Israel’ in the war that Egypt and Syria fought to liberate their occupied lands in 1967.

At the present time, oil prices are witnessing a crazy rise after the Russian invasion of Ukraine, until the price of Brent crude for July 2022 delivery reached $117.31 per barrel.

It is also expected that its prices will continue to rise in light of OPEC's refusal to increase production to reduce the price and compensate for the Western blockade of Russia.

 

Stand Up to OPEC

Here, the American policymakers, who have been seeking for more than two decades to control the global oil industry, have returned to brandish a bill against OPEC.

OPEC was established in 1960 with the aim of determining the global supply and price of oil. It includes 13 producing and exporting countries led by Saudi Arabia, mainly Middle Eastern and African countries.

The bill that the United States has been seeking to enact through Congress since the end of the 1990s is called No Oil Producing and Exporting Cartels (NOPEC), in reference to the rejection of OPEC control over the production policy and raising the global price of crude.

What is new is that while some congressional representatives are pressing to pass this bill, the scenario of its disruption is repeated within the American legislative institution, amid speculation that Saudi Arabia and the American oil interests lobby are pressing to keep it inefficient.

The bill has witnessed several cycles since 2000 and was unable to leave the Congress and then ratify it, and there is a possibility that the file will not be raised in light of the news of fundamental changes in Washington's position due to its need for Riyadh's role.

In addition to the American newspapers' talk about an expected meeting between President Joe Biden and Saudi Crown Prince Mohammed bin Salman during the first visit to the Arab region in late June; other events indicate that it is difficult to continue the NOPEC bill with these developments.

US Secretary of State, Anthony Blinken, discussed the importance of international support for Ukraine with his Saudi counterpart, Faisal bin Farhan, during a phone call on May 30, 2022, according to an official US statement, which indicates an American desire for Saudi Arabia to participate in the siege of Russia by increasing its oil production to compensate for the West's dispensation of Moscow's oil.

A day before, Hebrew Channel 21 revealed a secret visit of a high-ranking Israeli official to Saudi Arabia to coordinate a series of security cooperation operations, and the visit included meetings at the royal palace in Riyadh.

However, this comes in the context of Washington preparing the atmosphere between Saudi Arabia and ‘Israel’ to solve the problem of the presence of international forces on the islands of Tiran and Sanafir, in preparation for Biden's visit and a meeting with bin Salman.

This indicates the acceleration of US-Saudi contacts to arrange a process of exchange of interests between the two parties, in which Washington seeks to obtain a Saudi pledge to increase oil production and compensate Russian energy sources.

 

Shuttle Courses

The NOPEC bill has enjoyed a series of shuttle cycles in Congress indicating the extent of the conflict surrounding it, and the efforts of internal and external parties to keep it in its corridors.

US Lawmakers had previously rejected it more than once, but it resurfaced again in conjunction with the rise in fuel prices to unprecedented historical levels and as a weapon used by the Biden administration, threatening Saudi Arabia to join its camp against Russia.

The first to present this bill to Congress was Senator Herb Kohl in June 2000, and only 11 deputies supported it, with the majority against it.

Its presentation was repeated in 2001 after the September 11 bombings, as a form of punishment for Saudi Arabia, but it was obstructed by the oil interests lobby, including former President George W. Bush, who rejected it.

Then Representative John Conyers proposed it again in 2007 in Congress in a new way to discuss it, but it also won only 11 votes, and since that time the controversy returns over it whenever oil prices rise.

Previously, Bush opposed it and his administration threatened to veto the bill, and Representatives in Congress accused it of defending the interests of international oil companies, not the American consumer.

In return, former President Barack Obama agreed to it, but it was not passed during his reign.

Previous versions of the NOPEC bill submitted to Congress failed due to the resistance of pressure groups within the American energy sector, such as the American Petroleum Institute, which indicated that “the bill could harm American oil and gas producers, and lead to an increase in oil production than the market needs.”

These groups also justified the bill's rejection that it might lower prices to a degree that US energy companies would find it difficult to boost the production of expensive shale fuels.

It was then approved for the first time by a Senate Judiciary Committee on May 05, 2022, by a vote of 17 to four.

But its approval, implementation, and the initiation of lawsuits in US courts against OPEC oil producers on the grounds of conspiracy to raise its prices, still need to be fully approved by the Senate and House of Representatives, and then signed by President Joe Biden to become effective.

It seems that Congress's move to the NOPEC bill now aims to reduce the influence of OPEC at the request of the Biden administration.

This comes as part of its international conflict with Russia for its blockade and stopping the world's import of its oil, in return for pressure on OPEC to increase production, and compensate the West when it completely abandons Russian energy.

However, the OPEC law includes a clause granting its members immunity from any lawsuits from countries, organizations, or courts around the world, which is what the NOPEC bill aspires to nullify through this legislation.

It is also a move by the Biden administration or a pressure card in the face of the Crown Prince of Saudi Arabia, who rejects Washington's demands to increase production to relieve pressure on the US president, who is facing internal criticism over fuel price jumps.

Together with its partner countries, including Russia, the OPEC controls 70 percent of all internationally traded oil and 80 percent of all its reserves, the US Congressional Judiciary Committee said May 06.

 

Paper Hero

The office of US Senator Chuck Grassley, who is adopting the bill with several other senators, said on May 05 that “a House committee would soon consider the bill.”

His bill was endorsed by Senate Majority Leader Chuck Schumer and author of the original version of the bill in 2000, as well as Democratic Representative Joe Manchego Manchin of West Virginia and author of the 2011 version.

In the House, the legislation was passed by Republican Representative Steve Chabot of Ohio and supported by Representative Jerry Nadler, a New York Democrat who chairs the House Judiciary Committee.

Analysts believe that if the bill is passed, it will lead to problems in the supply of commodities other than oil and that other countries could take similar steps to punish the United States for reducing the supply of agricultural products to support domestic agriculture, according to what the Reuters agency said on May 05.

They assert that other countries can also decide to purchase some weapons from countries other than the United States, hitting a lucrative business for American defense contractors.

Non-US oil producers could also restrict US investment in their countries or simply raise prices, undermining the bill's primary objective.

“The United States and its allies are already facing major challenges in securing reliable energy supplies, and the last thing we have to do is drop a grenade like this,” according to Paul Sullivan, a researcher at the Atlantic Council's Global Energy Center, about the dangers of NOPEC.

There is something more dangerous than that, which is dispensing with the dollar, and that countries buy their reserves in other currencies such as yuan, yen, and ruble and raise the gold cover instead of the dollar, or sell oil in a currency other than the dollar, according to Reuters.

So economists describe the NOPEC bill as a paper hero, just like Don Quixote, the stupid nobleman who thought himself on a sacred mission, fighting windmills.

They see that the stupid nobleman here is the United States, the sacred mission is to protect American consumers and companies from the sudden rise in the cost of gasoline, and the first victim of this project is the dollar.

UAE, Saudi energy ministry responded to the NOPEC bill, telling CNBC on May 10, 2022, that “it could push oil prices up by up to 300 percent and could bring more chaos to energy markets.”

 

Close Deal

It seems that Joe Biden's possible visit to Saudi Arabia during his tour of the Middle East is the beginning of Riyadh's desires that Washington will fulfill, CNN and Axios website reported at the end of May.

It is expected that it will be preceded or followed by the Kingdom's intervention to increase oil production, to compensate for the West's abandonment of Russian energy sources by at least 90 percent as part of its blockade to stop its invasion of Ukraine.

The news circulating about the possibility of Biden's visit to Riyadh comes after a clear chill in relations between the two countries since Biden's arrival at the White House, who described Saudi Arabia during his election campaign as a pariah state, refusing to communicate with bin Salman, who is the actual ruler of the kingdom.

However, after Joe Biden assumed the presidency of the United States, a year and a half ago, Saudi-US relations experienced their worst period since the historic alliance between the two countries after World War II.

Biden ignored dealing with bin Salman, especially after reports of his involvement in the killing of Saudi journalist Jamal Khashoggi.

The Biden administration, one month after coming to power, declassified an intelligence report that concluded that Mohammed bin Salman had ordered the killing of Khashoggi, which the Saudi authorities have long denied.

Since then, the Biden administration has contented itself with some phone calls with 86-year-old King Salman bin Abdulaziz.

White House spokeswoman Jen Psaki said at the time that “the US president would speak with his counterpart, King Salman, and not with the crown prince.”