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OPEC secretary general warns NOPEC legislation would not serve US interests

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OPEC secretary general warns NOPEC legislation would not serve US interests

The passage of U.S. legislation that would allow lawsuits to be filed against OPEC for price fixing would not be in the best interest of the country or the industry as a whole, an OPEC official said on the sidelines of CERAWeek by IHS Markit on March 12.

Known as NOPEC, the legislation would allow antitrust lawsuits against the cartel.

"It is not our policy to dabble in domestic legislation in the U.S.," OPEC Secretary General H.E. Mohammad Sanusi Barkindo said in Houston. "But the legislation, as it stands, would not serve the interests of the U.S."

The U.S. is now the largest crude oil producer in the world, recently surpassing Russia, prompting OPEC officials to reach out to officials in Washington, D.C., and other stakeholders in a bid to ease simmering tensions, Barkindo added.

In order to stabilize oil prices, OPEC and 10 non-OPEC producers, led by Russia, agreed in December 2018 to cut a collective 1.2 million barrels of oil per day through June. That followed two years of a 1.8 million bbl/d cut from 2017-2018.

Barkindo said an OPEC/non-OPEC market monitoring committee meeting March 18 "will feed into" a meeting of the full coalition in Vienna on April 17-18 to assess the status of the 1.2 million bbl/d cut agreement ahead of its expiration in June.

Barkindo declined to speculate if the cartel will decide to extend the current output cut beyond June.

OPEC will release its latest monthly oil analysis March 14. In its February report, the cartel said that after falling in 2018, demand for OPEC crude oil will continue to retreat this year.

Demand for OPEC barrels in 2018 was 31.6 million bbl/d, down 1.3 million bbl/d from 2017. In 2019, the call on the organization's crude oil is expected to fall to 30.6 million bbl/d. On the supply side, the cartel's fourth-quarter 2018 production totaled 32.09 million bbl/d.

During a March 11 discussion regarding the global oil markets in Houston, when asked if the market is currently balanced, Barkindo said, "It is a work in progress."

According to the International Energy Agency, the U.S. was able to become a major crude oil exporter due to the massive boom in U.S. shale production, which rose to more than 7 million bbl/d at the start of this year. U.S. shale oil production rose by 2.2 million bbl/d in 2018, with expectations that tight oil output will grow by another 3.3 million bbl/d through 2024.

The U.S. is expected to see impressive demand growth through 2024 due to a robust economy and increased demand from the petrochemical industry.