Washington Threatens Action After OPEC Announces Cuts

Washington policymakers reacted negatively last week after the Organization of Petroleum Exporting Countries (OPEC) announced that it would support a two million-barrel cut in global oil production. OPEC is led by Saudi Arabia and Russia.

Two million barrels of oil constitute about two percent of the global daily oil production.

While that number may not seem large, analysts expect the decision to cut production to impact prices in the United States, which is why Washington policymakers are mobilizing.

To start, the Biden administration said it will prepare to release 10 million barrels from the Strategic Petroleum Reserve in November and that it will consult with Congress “on additional tools and authorities to reduce OPEC’s control over energy prices.”

Congressional leaders already are thinking about what those tools could be. Specifically, U.S. Senate Majority Leader Charles Schumer (D-N.Y.) said he is considering whether to bring to the Senate floor legislation that would change U.S. antitrust law to expose OPEC+ member countries and their oil companies to lawsuits.

The bill would allow the U.S. attorney general to sue state-owned oil companies like Russia’s Lukoil in federal court. The legislation already has been approved by the Senate Judiciary Committee.

Stay tuned to Connecting the Dots for updates when and if that bill moves forward.