NOPEC Bill Can Be Trump’s Biggest Hope to End the Oil Price War

In the past 2 weeks, major oil producers in the world have been trying their best to cope with the greatest crisis in several decades, while oil price has experienced a week‘s heavy losses. Saudi Arabia and Russia continued their price war, but both sides may still return to the negotiation table as the current oil price much lower than targets in the budget has placed much pressure on both countries’ economy.

Saudi announced last week to cut US$133 billion(50 billion Saudi riyals)of government spending, which accounts for 5% of the total budget in 2020, after the government decided to reduce projects with least social-economic influence. Meanwhile, the US may consider intervening if the current tension between Saudi and Russia persist. The No Oil Producing and Exporting Cartels Act(NOPEC) can be President Trumps ultimate weapon to end the oil price war.

The United States may put pressure on Saudi Arabia to end the price war by passing the NOPEC bill in an attempt to save the struggling US shale oil industry. Early in last April, Saudi Arabia had voiced disapproval against the US NOPEC bill and even considered stop using US dollars to settle oil if the bill should come into affect, which would make U.S. oil producers the biggest victims of the oil price war.

The price war between OPEC and Russia has obviously targeted producers with higher costs, mostly US producers. The US has become a major player in the global oil market and a major exporter. The question now is how long Saudi Arabia will continue increasing its oil production.