OPEC vs NOPEC: Which will prevail?
As OPEC stands in the face of the US calling for more oil supplies, the United States is setting the stage for a lawsuit against the alliance for claims of antitrust and market maniupulation.
The Organization of the Petroleum Exporting Countries (OPEC) does not plan on helping the West deal with the surging energy prices by pumping more oil into the market nor upping its production, The Telegraph reported on Sunday, citing sources.
Riyadh has rebuffed requests by the United States for more oil, as Saudi Arabia has the potential of easing pressure on supply and prices, which would mitigate the current economic crisis.
The British outlet warned that prices continuing on this path would deteriorate the global economy and force it into recession as it tanks demand, which would lower prices and hurt oil-producing countries.
The newspaper attributed Saudi Arabia's refusal to increase oil production to worsening ties with Washington under the Biden administration in addition to Russia's membership in the OPEC.
OPEC+ decided earlier this week to adhere to its oil output cut deal and up production only by the already-planned 432,000 barrels per day in June. The alliance's announcement came in light of Europe nearing a full bn of Russian energy launched against Moscow over the war in Ukraine.
OPEC Secretary-General Mohammed Barkindo had warned EU ministers in April that current and future sanctions on Russia might cause one of the worst oil supply shocks in history, saying that it would be impossible to recover the volumes lost in such a scenario.
Barkindo stressed embargoes and other restrictions on Russian business were causing seven million barrels of Russian crude per day to leave the global market.
The OPEC official also informed the EU that the present market volatility is caused by "non-fundamental issues" outside of OPEC's control and that it is the EU's job to advocate a "realistic" approach to the energy transition.
Political rifts have deepened between Saudi Arabia and the United States in light of the war in Ukraine, according to both US and Saudi officials.
Washington requested that Saudi pump more oil to mitigate the rising oil prices and undermine Russia's economy, but Riyadh did not comply, conducting business as usual.
Still, Saudi Crown Prince Mohammad bin Salman has stressed several times that Riyadh agreed with the Biden administration on 90% of issues, revealing that the two sides are cooperating to find common ground on their disagreements.
NOPEC wants to drill for its own oil
The Biden administration is reviewing a US Senate bill that would set the stage for Washington to file lawsuits against OPEC due to the potential consequences of the measure, White House spokesperson Jen Psaki said.
"I don't have an official position on this legislation right now, but we do believe that the potential implications and unintended consequences of this legislation require further study and deliberation," Psaki said during a press briefing on Thursday.
The US Senate Judiciary Committee advanced earlier this week the No Oil Producing and Exporting Cartels Act (NOPEC), which would make it possible to sue OPEC on the grounds of antitrust behavior and market manipulation, though it is unclear whether the bill will make it to the Senate floor for a vote.
Following the start of the war in Ukraine, the US and its allies rolled out comprehensive sanctions, including restrictions on the Russian central bank, export control measures, SWIFT cutoff for select banks, and closure of airspace to all Russian flights. Many of their companies have suspended their Russian operations.
The status-quo and the sanctions weakened US citizens' purchasing power, causing fuel prices to soar in the country with US oil prices reaching their all-time high following a ban on Russian fuel exports.
The EU has declared preparations to join the United States and the United Kingdom in imposing an embargo on Russian energy products. However, unlike the United States and the United Kingdom, the European Union buys the majority of its energy supplies from Russia, and experts have warned that cutting off the supply may have disastrous consequences.
Oil and gas aren't the only commodities impacted by Ukraine's conflict. Russia and Ukraine produce almost one-third of the world's wheat exports, and both are big exporters of sunflower oil and fertilizer. As a result, food prices have reached historic highs, and several countries and non-governmental organizations are warning of impending food shortages.