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US Energy Secretary Rick Perry said Thursday that anti-OPEC legislation under consideration in Congress could lead to an oil price spike by preventing the world's producers from managing supply.
Perry essentially defended OPEC's role of balancing oil supplies and delivered a critique of the proposed bill for which President Donald Trump has repeatedly expressed support, although not since taking office.
The White House, which did not respond to a request for comment on Perry's remarks, has not said whether Trump would sign the bill if Congress passes it.
The House Judiciary Committee on February 7 unanimously approved the No Oil Producing and Exporting Cartels Act, clearing it for a vote by the full House of Representatives. A similar bill introduced in the Senate has not received a vote.
Versions of the so-called NOPEC legislation have been introduced for two decades without going anywhere.
"I think we need to be really careful before we pass legislation that may have an impact that goes way past its intended consequence," Perry said during a press conference at the Department of Energy headquarters, joined by International Energy Agency Executive Director Fatih Birol.
Perry said the global oil market still needs supply management.
"I'm for stable pricing which is directly related to supply," he said. "If you remove that, and there is no coordination of supply to the market, you could have a massive amount of energy supply come into the marketplace and impact producers."
Perry said that would push some producers out of the market, leading to underinvestment, lower production and an eventual price spike.
Asked if the Trump administration was worried about a price impact from the International Maritime Organization's sulfur cap taking effect January 1, 2020, Perry said Trump is always watching the oil price.
"I think I can speak for the president without having to pick up the phone and ask him -- he's always concerned about spikes in prices," Perry said. "He may have tweeted about it already this morning."
Perry added that the goal of US energy policy is stable prices, which are good for the world's markets.
"A stable, level ... market is our goal, recognizing we're going to have some blips and ups and downs," he said.
IEA's Birol testified to Congress later Thursday that global refiners are preparing for the implementation of IMO's 0.5% sulfur cap on marine fuels.
Birol said there was initially a "bit of panic" in the oil industry about the rules, but now refiners are adjusting to the impending regulations.
"There may be some temporary price spikes for diesel and jet fuel prices, but we think the market will adjust and we don't expect those price spikes will be long-lasting and big," he said. ""There will be some adjustment period. But the refineries are now today being configured according to the IMO rules, and the US is one of the leaders."
(Adds details and comments by IEA chief)
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