This apparent impending kick in the teeth to the beloved oil sector allows the US to sue oil producers for “collusion”, which may include price fixing, supply manipulation, and other standard OPEC behaviours of the last 40-50 years.
…So why the turnaround?
The United States has received a lot of justifiable criticism for its coddling of OPEC over those years. Additional political sycophancy has also been part of the mix, which makes this sudden shift pretty different by any standards.
However – The US is also now producing a lot of its own oil, so the value of OPEC as an asset may well have declined. The move to solemnly proclaimed free market competitive standards may get a laugh out of anyone who’s been watching OPEC and the US in their Dance of Death, but it’s also a serious move to cracking a market wide open.
OPEC, in many ways, is a nuisance, politically and economically. The big oil guys in the US seem to be decluttering the ol’ shop floor, and OPEC is no longer either an excuse for prices or a high value supplier. US Reps have in the past opposed the NOPEC idea, but they’ve suddenly stopped doing that. The fact that OPEC is also situated largely in many of the world’s more popular war zones and terrorism promotional hot spots doesn’t help, either.
It should be noted that this move by the US is purely economic, not political except insofar as it reduces the clout of OPEC in the US. The policy is acting uncharacteristically professional for this administration, which means the move probably wasn’t sourced from the White House, but the Reps.
Where does this leave OPEC?
If the bill goes through, it leaves OPEC with a large gap in its working methods. The US has given itself some leverage in its relationship with OPEC, which is a big, if not obvious step in redefining the influence and reach of OPEC in many ways. It’s also a probable back door shot at Iran and Venezuela, current US targets.
The alternative for OPEC is to realign towards China, the easiest move, but it’ll take some time, and won’t really replace the US market in dollar terms. OPEC may well be on the way out as an economic superpower, which could have major ramifications in the oil producing member countries in the Middle East and elsewhere, and not necessarily for the better. If the oil supremoes go, who and what’s to replace them?
Few tears will be shed for OPEC when it goes, but the price on the ground in those countries may be very high indeed.
