![]() drillers, some of which are already reluctant to boost output despite the cut. Saudi Arabia and other OPEC countries have some of the world's cheapest and easiest reserves to produce.Ī wave of oil from OPEC producers, even at a time of concerns about Russian supply could chill U.S. energy companies have difficulty boosting output. One industry concern is that NOPEC legislation could ultimately lead to overproduction by OPEC, bringing prices so low that U.S. Such legislation would be unhelpful in any market condition past, present or future." Mike Sommers, API's president and chief executive, said NOPEC "would create further instability in the marketplace and exacerbate existing challenges in international commerce. ![]() Lobby group API has long opposed NOPEC, saying it could hurt U.S. Instead, OPEC+ on Wednesday agreed to cut output by the most since the start of the COVID-19 pandemic. Saudi Arabia has rebuffed repeated lobbying during visits by Biden officials not to cut production. ![]() ![]() oil lobby group, the American Petroleum Institute (API).īut anger has risen in Congress about gasoline prices that earlier this year helped fuel inflation to the highest level in decades. Given Biden's admission that oil will be needed for the foreseeable future, though, it seems that the American relationship with OPEC, at least for now, will continue.Previous versions of the NOPEC bill have failed amid resistance by oil industry groups, including top U.S. Biden has similarly blamed the organization for not producing oil fast enough to drive down costs, and Congress has threatened potential antitrust lawsuits against OPEC. Former President Donald Trump, for example, called OPEC "a monopoly" and demanded a reduction in prices. Under the impression it may soon be rendered obsolete, OPEC has had its back-and-forths in recent years with the United States. The Biden administration in particular has championed renewable energy and a shift away from fossil fuels as a necessity - though Biden himself said during the 2023 State of the Union that the United States "was still going to need oil and gas for a while." continues to heavily rely on foreign oil, CNN notes). This is partially due to the fact that most American presidents have pushed for more energy independence, albeit not very successfully (the U.S. Since the 1970s, "OPEC has often had a rocky relationship with the United States," the Council on Foreign Relations (CFR) reports. What is the United States' relationship with OPEC? Rather, OPEC would prefer the price of oil rises as supply increases, though "that is not how market dynamics work," and any cut in production typically causes an immediate price hike. However, while the law of supply and demand is a basic principle of economics, "no individual country actually wants to reduce supply, as this would mean reduced revenue," Investopedia continues. This caused the price per barrel to hit $85, a six-percent bump. OPEC naturally keeps the market price of oil high in order to maximize its profits, as was seen when the organization slashed production in early April to just 3.7 percent of the global demand, Reutersnotes. "OPEC+ member countries collectively agree on how much oil to produce, which directly affects the ready supply of crude oil in the global market at any given time," Investopedia, which examined the organization's influence in more detail, reports. Indeed, the organization can "keep prices high by lowering supplies when the demand for oil slumps," she said. OPEC+ in particular is able to tailor "supply and demand to balance the market," Kate Dourian of the Arab Gulf States Institute in Washington, D.C., told BBC News.
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