Exclusive: do not mention the price of oil – The US legal threat is pushing for a change at OPEC

LONDON / DUBAI (Reuters) – The OPEC has urged its members not to mention oil prices when they discuss policy in a breakup of the past, as the oil production group seeks to avoid the risk of US lawsuits for market manipulation, sources close to the OPEC said.

The proposed US legislation known as "NOPEC", which could open the group to antitrust litigation, has long been dormant, with former US presidents saying they would veto any move to adopt.

But US President Donald Trump has sharply criticized the Organization of the Petroleum Exporting Countries, blaming it for high oil prices and urging it to increase production to ease the pressure on a market hovering around the peaks of the four last years.

This has made OPEC and its unofficial leader, Saudi Arabia, nervous about what this could mean for NOPEC, or cartel law without oil production or export.

The decision to refrain from discussing a preferred oil price level – a way for the group to guide market expectations – underscores Trump's aggressive stance on the oil market destabilizes OPEC and puts it to the test the links between the Riyadh and Washington allies.

In July, senior OPEC officials attended a workshop in Vienna with the international law firm White & Case to discuss the NOPEC bill. Lawyers advised to avoid discussing the price of oil in public and instead talk about the stability of the oil market, two sources close to the market. the material said.

OPEC officials have also been urged to explore the channels of diplomatic lobbying to prevent NOPEC from becoming law, said one of the sources.

On August 1, the OPEC secretariat sent a letter to the ministers, making a similar recommendation.

"We solemnly believe that the common goal of our actions is the stability of the market, not the prices," said in the letter of the UAE Minister of Energy, Suhail al-Mazroui, president in the exercise of OPEC this year.

"I would like to call OPEC member countries, as well as our non-OPEC colleagues, to refrain from any reference to prices in their comments on our collective efforts or the market situation. oil tanker, "he added.

White & Case did not respond to a request for comment from Reuters.

Specification of oil prices is not the only way to guide the market. By reducing production, it can support prices and by increasing stocks, it can do the opposite, for example.

But private coordination on how to communicate the OPEC message to the market represents a shift from past practice, while Saudi Arabia often indicated a preferential price level when it spoke of the policy of the OPEC and sought to adopt measures to achieve this.

DEFORMED LINKS

While the odds that the law will be passed this year seem slim, OPEC members and other oil producers are increasingly worried that they will be able to get Trump's support, given his open criticism of the truth. 39, OPEC and high oil prices.

The OPEC letter came two months before US-Saudi relations deteriorated further when a Saudi journalist disappeared during a visit to the kingdom's consulate in Istanbul.

Turkish officials say they believe that Jamal Khashoggi, a critic of Saudi politics, has been murdered and his body removed. Saudi Arabia has firmly denied killing Khashoggi.

Some members of the US Congress, which has long had a difficult relationship with Saudi Arabia, have criticized the kingdom for the affair.

A senatorial source familiar with the bill said that a renewed interest in NOPEC was likely, with lawmakers weighing everything in the wake of Khashoggi's disappearance.

The source, who requested anonymity, said it was difficult to gauge the current sentiment in the absence of lawmakers in town in the coming weeks.

THE RISKS OF LITIGATION MAY BE DIRECTED BY THE DELAY OF THE IPO

For much of last year, Saudi Arabia angered Washington by pushing OPEC to adopt measures to boost oil prices, in contrast to its earlier, more moderate stance.

Industry sources have associated this change with a desire to maximize revenues and to evaluate state power giant Saudi Aramco in anticipation of its IPO, a key element of the Crown Prince's reforms. Mohammed bin Salman to diversify the economy.

The float, which is expected to reach $ 100 billion, has been suspended, sources told Reuters.

Prince Mohammed said this month that the tank had been postponed to 2021, and several sources in the area say the delay was partly due to litigation risks if Aramco was listed in New York, the favorite place of the Saudi Crown Prince.

"There is a major fear that NOPEC will become another JASTA," said one of the familiar sources of preparations for Aramco's IPO, citing the Justice Against Terrorist Terrorism Act that allows victims of attacks of September 11, 2001 to prosecute Riyadh.

Saudi Arabia, which denies having participated in the attacks, had long enjoyed broad immunity from prosecution. That changed in 2016 when the US Congress canceled JASTA's veto by President Barack Obama.

With nearly $ 1 trillion in investment in the United States, including assets owned by Aramco, Riyadh would have a lot to lose if the NOPEC bill were passed.

It would revoke the sovereign immunity currently enjoyed by the United States for oil producers, including OPEC members.

The Washington-based law firm Gibson Dunn and the Saudi Embassy signed a contract at the end of August, according to a copy of the contract filed with the US Department of Justice.

The contract stipulates that among his other responsibilities, Gibson Dunn would be "opposed to NOPEC".

Saudi Energy Minister Khalid al-Falih also expressed his concerns about NOPEC to senior US officials, including US Secretary of Energy Rick Perry in private meetings. told Reuters two sources close to the conversation, anonymously.