The US Congress has introduced a bill with the title NOPEC. Wikipedia describes it as follows:
“The No Oil Producing and Exporting Cartels Act was a U.S. Congressional bill, never enacted, known as H.R. 2264 and then as part of H.R. 6074. NOPEC was designed to remove the state immunity shield and to allow the international oil cartel, OPEC, and its national oil companies to be sued under U.S. antitrust law for anti-competitive attempts to limit the world’s supply of petroleum and the consequent impact on oil prices. Despite popular sentiment against OPEC, legislative proposals to limit the organization’s sovereign immunity have so far been unsuccessful. Varied forms of a NOPEC bill have been introduced some 16 times since 2000, only to be vehemently resisted by the oil industry.”
Congress has voiced interest in reviving the bill, but Saudi Arabia has threatened the US with actions against the petrodollar. The current threat is similar to threats in the past in that the Saudis could start accepting payment for oil in currencies other than the dollar and thus undermine the US dollar`s role as the main payment currency for oil. The Chinese foundation of an oil futures market in Shanghai has this intention and promotes the renminbi as an oil currency.
Then the Saudis have threatened to divest themselves of American government securities, which would have an adverse effect on the bond market. In January 2019 the Saudis had about 320 billion dollars in American Treasuries. There is also the threat to divest dollar holdings in companies where the Saudis own shares. There is also the purchase of military hardware.
Opinions differ as to whether the threats are real or are only rhetoric. The fact is that any action taken by the Saudis to damage the US dollar would have negative effects on their own holdings in government bonds and in the value of the shares held in American companies if the value of the US dollar should fall.
The same holds true for China, which has over a trillion dollars in American securities. The Russians were able to divest almost all of the American paper that they held, but because of the much greater amounts involved, it appears that Saudi Arabia and China would inflict severe damage on their own holdings should they attempt to sell off large amounts of American paper. So Saudi Arabia appears to be a paper tiger. But it bombs Yemen.
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