If it didn’t work out with Russia: the United States found a new “victim” in the oil market

MOSCOW, 13 Oct — PRIME, Oleg Krivoshapov. US Treasury Secretary Janet Yellen has proposed setting a ceiling on the price of Russian oil at about $60 per barrel. Simultaneously with this decision, Washington wants to punish another world leader in the oil production market – Saudi Arabia – for the decision of the countries participating in the OPEC + agreement to reduce the production of raw materials. According to the White House, Riyadh supported Moscow and showed disrespect to America. Plans to put pressure on Russia through the “oil ceiling” have been talked about for a long time, but about how the United States will put pressure on the Saudis – in the material of the Prime agency.

CALL

“If you limit the price of oil from Russia or other countries, set some artificial price ceilings, then this will inevitably worsen the investment climate in the entire world energy industry, then provoke an increase in the global shortage of energy resources and a further increase in their cost,” he said during the forum. Russian Energy Week” Russian President Vladimir Putin.

These words, addressed to Western countries, including the G7, came exactly one week after oil-producing countries decided to cut production in November and December this year by 2 million barrels a day under the OPEC+ agreement. day. Such an agreement, with a high degree of probability, will not lead to lower prices in the energy market, which is eagerly awaited in Europe and the United States. Rather, the price of “black gold” in the coming weeks and months will go up. This development calls into question the efforts of the incumbent US President Joe Biden, who is desperately trying to solve two problems – to achieve a reduction in gasoline prices in the US domestic market before the midterm congressional elections and to put pressure on the volume of revenues coming to the Russian budget from the sale of oil.

At the same time, in Saudi Arabia itself, which has great authority among crude oil exporting countries, the OPEC + decision is considered purely economic.

THREATS AND EXCUSES

The decision to cut oil production caused a tough reaction from the White House. Biden threatened serious consequences for Saudi Arabia, which, along with Russia, plays one of the key roles in the alliance. Adding to Washington’s annoyance is the fact that in recent months it has sent repeated signals prompting Riyadh to do the exact opposite—significantly increase production. However, the Saudis for their decision, different from the wishes of the Americans, were accused of supporting Russia, which has become the object of the West’s claims, including in the field of energy policy.

Biden’s remarks, Reuters noted, came a day after influential Democratic Senator Bob Menendez called for an immediate end to Wanigton’s cooperation with Saudi Arabia. Including – in the issue of arms sales.

EXPECTATIONS AND ASSUMPTIONS

One of the most logical measures that could affect almost the entire global oil market could be an attempt to lobby in the US itself for a long time discussed among politicians and the media package of laws known as the No Oil Producing and Exporting Cartels Act (NOPEC). Its essence is to give the US Department of Justice the right to prosecute OPEC + countries, including Saudi Arabia, “for antitrust violations.” The topic has been discussed for quite a long time.

For example, former US President Barack Obama, while still only a senator, actively supported the idea of ​​NOPEC. However, having taken the presidency, he refused it.

“For the time being, we assess the chances of the adoption of this law as low,” said Ekaterina Krylova, managing expert of Promsvyazbank (PSB). “More words than deeds. It’s just that the latest actions of OPEC + went strongly against US plans, and the attempt to activate the topic is quite understandable.”

Aleksey Kokin, chief analyst for the oil and gas sector at Otkritie Investments, takes a slightly different position.

“We assess the likelihood of this law being passed as higher than before the decision of OPEC + to reduce the quota,” the expert noted. “The point is not in the quota and not in the reduction — it may turn out to be insignificant due to a number of factors — but in Saudi Arabia’s demonstrative unwillingness to cooperate with G7″.

The effect of this decision, if adopted, depends on law enforcement, the expert suggested.

“The fact is that the law will only give the US Department of Justice the right to file an antitrust lawsuit against OPEC,” the expert argues. “Such a lawsuit will be considered for years, OPEC will hire the best lawyers, appeals will reach the Supreme Court.”

However, the expansion of the legal tools of the US antitrust authorities fits into a trend that cannot but worry OPEC +, Kokin said. “This is increased opposition on the part of buyers to the actions of the cartel of sellers,” he notes. “This can also include the “price ceiling” for Russian oil. The threat is serious, because the United States, together with the EU and other OECD countries, provide more than half of world oil demand.”

However, the effect of such a legislative package will be destructive and will make the oil market even more volatile, Krylova from PSB is sure.

But as long as this question remains open, the United States will try to create legislative levers of pressure on oil-producing countries.