OPEC and Russia-led non-OPEC oil producers are highly unlikely to create some kind of a formal joint organization for managing the oil market, due to the additional bureaucracy and to the risk of falling prey to a proposed U.S. legislation that could open the cartel and allies to antitrust lawsuits, Russia’s Energy Minister Alexander Novak said on Thursday.
Although Russia and OPEC have been touting in the past the idea of “institutionalizing” their cooperation in the oil market by forming some kind of organization, Novak said the idea had now been discarded.
“There is a consensus that there will be no such organisation. That’s because it requires additional bureaucratic brouhaha in relation to financing, cartel, with the U.S. side,” Reuters quoted Novak as saying at a briefing with reporters.
It’s not only Russia that has been concerned with the possibility that the U.S. could pass this time around the so-called No Oil Producing and Exporting Cartels (NOPEC) Act that could pave the way to antitrust lawsuits in the U.S. against the cartel and its national oil companies. According to analysts, the NOPEC Act has been a big concern for OPEC members lately.
Forms of antitrust legislation aimed at OPEC were discussed at various times under Presidents George W. Bush and Barack Obama, but they both threatened to veto such legislation. President Donald Trump, however, has been openly critical of OPEC’s market-management efforts over the past year.
Speaking to reporters on Thursday, Russia’s Novak said “I think, non-OPEC (countries) will not agree as they don’t want to be hit by sanctions.”
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Yet, Novak insists that Russia’s cooperation with OPEC and its largest producer Saudi Arabia will continue, “one way or another”, even without a formal institution or organization.
Referring to the cooperation with OPEC, the Russian energy minister said that “This won’t be an organisation, this is some mechanism of cooperation: to convene, to discuss, adopt some memorandums, joint resolutions.”
Commenting on oil prices, Novak said today that the unpredictability of the U.S. Administration, as well as protectionism and trade wars, have contributed a lot to the oil market volatility over the past two years.