After oil prices had their best January on record, the WTI crude price fell as much as 5.5 percent this past week due to U.S.-China trade uncertainty and worries of a global economic slowdown. The trade dispute between the United States and China made investors worried as Donald Trump said he wouldn’t meet President Xi Jinping before March 1, the trade deal deadline.
Yet another threat to oil prices also emerged this week. A group of bipartisan U.S. senators rolled out a bill that would allow the U.S. to sue OPEC for violating antitrust rules.
If the bill passes, OPEC members will no longer be immune to U.S. lawsuits. The new law would allow the U.S. government to sue both OPEC members and the oil exporters they work with.
“The Organization of Petroleum Exporting Countries, or OPEC, is an international cartel whose members deliberately collude to limit crude oil production as a means of fixing prices, unfairly driving up the price of crude oil to satisfy the greed of oil producers,’’ said Congressman Jerrold Nadler, the Chairman of the House Judiciary Committee.
Donald Trump has repeatedly blamed OPEC for high oil prices, but the recent price rally was caused by something else. New sanctions on the Venezuelan national oil company PDVSA pushed prices into a bull market.
The anti-OPEC bill leaves us wondering if the U.S. will sue its biggest foreign ally – Saudi Arabia – or if the bill is a clever ploy to add pressure to U.S.-Russia relations.