Author: Justin Dargin
Affiliation: Middle East Energy Scholar at the University of Oxford (Former Legal Advisor to OPEC)
Organization /Publisher: Al Jazeera Centre for Studies
Date/Place: January 2, 2022/ Doha, Qatar
Type of Literature: Analysis
Number of Pages: 18
Keywords: OPEC, NOPEC, United States, and Sovereign Immunity
Brief:
The article discusses the tangled relations between OPEC and the United States as the two sides are wedded in an insoluble marriage for the long term. The previous efforts to strip the sovereign immunity shield from OPEC have proven unsuccessful. However, the recent bill NOPEC, making its way through the U.S. Congress, would strip OPEC’s authority and allow the Justice Department to sue OPEC members for alleged antitrust violations in its attempts to reduce global oil supply to influence prices. The author Justin Dargin highlights how NOPEC would set a dangerous precedent and initiate a type of domino effect, because if sovereign immunity were to be removed from one state or its agents, it could also be employed capriciously against other states leveraged by politicians based on short-term political expediency which will cause capital flight from the US. There is also a possibility of retaliatory action against US assets abroad. Looking at the situation, in the author’s opinion it is unlikely that the NOPEC bill will become law. But if passed, there would be issues in meeting the legal burden of proving that OPEC violated all the elements of the American antitrust provision. Firstly, because OPEC controls only 37% of worldwide oil production. Secondly, OPEC has been plagued by coordination issues, and member states usually have their own geopolitical and economic interests that make coordination exceptionally difficult. The author concludes that although oil politics garners news coverage and inspires populist rhetoric, the United States and OPEC are inseparable. The unwritten contract of their symbiotic relationship is that as the United States has undertaken the protection of global sea lanes from potential disruption in the oil market, OPEC would carry out the mandate to prevent extreme oil market volatility and ensure global economic stability. All in all, OPEC’s influence on the world is quite multifaceted, and contrary to the conventional narrative, many in the West would grieve the loss of OPEC’s moderating influence on the global oil sector.
By: Razia Wadood, CIGA Senior Research Associate
