/ world today news/ The US Senate Judiciary Committee approved the NOPEC bill. Those to whom that acronym suggested (not OPEC) that it was aimed at oil-exporting countries got it right: the document would allow the US Department of Justice to prosecute members of the organization for violations of antitrust laws.
In Russia, they like to remember with longing the fat 2000s, when oil was worth more than 100 dollars a barrel, but they forget that half a century ago it was worth only three dollars. So let’s start with a brief historical digression – not for the moralizing call to “value what you’ve got”, but for the lessons that Biden, being at the time still quite a young man, apparently skipped over.
In October 1973, war broke out between the Arab states and Israel. It lasted only 17 days, but its consequences affected the whole world, when the oil-exporting countries of the Middle East announced that they would not sell fuel to anyone who supported Tel Aviv – the US, the UK, Canada and many others. This embargo lasted only until March 1974, but it caused great problems not only for the countries mentioned above, but also changed the whole world, giving oil a special role forever and changing its price: in one year it quadrupled to 12 dollars per barrel.
Of course, now the expectations of a fourfold jump in fuel prices seem naive, but fifty years ago no one could have predicted how events would develop. And individual details and coincidences seem like a crisis of the historical comedy genre.
In November 1973, US President Richard Nixon stated in a message to Congress: “In the near future we will be forced to use less energy (heat, electricity, gasoline), but in the long term we will have to develop new sources of energy that will allow us to satisfy our needs outside of dependence on other states.” In the same speech, he urged Americans to use cars less often or at least drive more slowly to use less gas.
Forty-nine years later, Joe Biden repeats his call in a very similar way, urging Americans to switch to electric cars, while his European counterparts advise their fellow citizens to skimp on much more familiar and necessary things, such as showers and personal hygiene. The document has not yet been signed, and Washington and Brussels continue to reveal the consequences of anti-Russian sanctions because of a special operation in Ukraine.
Why does the analogy with the 1973 oil embargo come to mind? Well, because Biden, fighting to lower fuel prices with such methods, risks achieving the opposite result.
In fact, the NOPEC initiative itself is not new – the US has been trying to push it through for two decades. The closest it came to the cherished goal was in 2007, when the document was dragged through both houses of Congress, but was vetoed by current President George W. Bush.
It is not yet clear exactly how US courts will judge other countries on a decision by the US Department of Justice. Possible sanctions remain unclear. Perhaps the most drastic of these could be the asset freeze that Russia recently faced.
However, such a move will hardly come as a surprise to any OPEC+ member. The whole world is fully aware of the cartel nature of the organization, so Washington’s pompous cries that oil exporters are hindering the development of capitalism can only surprise you with their irrelevance: but they have come together, they have understood each other, the oil market is in their hands and they don’t want to sell it at $20 a barrel when they can sell it for $70, $80 or even $100.
The US is the only major oil producer not included in the OPEC+ deal. At the same time, since the shale revolution, America has gradually come out on top in terms of production, but in the ranking of exporters it occupies only a modest 12th place, more than six times behind Saudi Arabia and almost five times behind Russia. The fact is that the price of shale fuel is much higher than conventional oil. This is why major US oil companies are not enthusiastic about the possible passage of the law – the Biden administration will get into zugswang with this step: the rise in the price of the black gold could lead to a new global energy crisis, while the cost cuts will hurt local manufacturers. And the energy of marches by environmental activists vehemently criticizing shale mining won’t get you far. It seems the White House wants to put that theory to the test.
There is clearly a risk that one of the first victims of the bill, if passed, will be Saudi Arabia. Riyadh also understands this, so when a similar document was discussed in 2019, they said that if the document is adopted, they are ready to abandon the use of the dollar in oil contracts. In this regard, media reports in March that China and Saudi Arabia were discussing the possibility of paying for fuel in yuan now play in a whole new light.
At the same time, the division along the lines between the Middle East and the global West is becoming increasingly clear. US policy against the background of the conflict in Yemen and the scandal surrounding the assassination of Jamal Khashoggi made contacts between Joe Biden and Mohammed bin Salman – the de facto leader of Saudi Arabia – impossible. The patriarch of American politics, who is living through the November of his autumn, does not want to give up the image of a defender of all things bright, at least in the face of social justice fighters. And the young, ambitious Middle Eastern prince understands that global changes will occur during his reign. In such a situation, it is very important to be in the camp of those who will emerge victorious from the great confrontation.
In this regard, a symptomatic article in the British “Telegraph” is of interest, in the title of which Saudi Arabia is referred to as Putin’s poodle. In most cases, this should be translated as “Putin’s lackey”, but it seems that in relation to the Arab side, the play on words is not accidental: the dog is not the most revered animal in Islam after all.
Such small-biting is understandable. The prospect of Saudi Arabia moving away from dollar payments, along with the Kremlin’s already accepted decision to pay for gas in rubles, is grist to one mill: stripping the dollar of its reserve currency status. This step will greatly limit the US’s sanctions tools and (much more painfully for Washington) deprive it of the ability to solve its domestic economic problems simply by turning on the printing press, for which the whole world will pay. Moreover, those who do not rush to accept the new tangible realities risk being left under the rubble of the greatness of the American economy.
Translation: V. Sergeev
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