Saudi Arabia seems to be a taking a tougher stance against the ‘NOPEC’ bill, which is designed to remove immunity shield for states in the Organization of Petroleum Exporting Countries (OPEC). Under the act, the national oil companies along with states can be sued by the U.S. Department of Justice (DoJ), under U.S. antitrust law for anti-competitive attempts to limit the world's supply of petroleum and the consequent impact on oil prices.
The congressional bill, which was first introduced 19 years ago has so far failed to pass through the U.S. Congress several times due to extensive lobbying by oil producing companies and OPEC cartel. But, with President Donald Trump at the White House, the bill has an increased chance of passing this time around. Hence the threat from Saudi Arabia. However, the probability of the bill passing through Congress is still low.
But if the bill somehow gets through and Saudi Arabia follows through its threat, it would be a big blow for the USD, as most of the oil and other commodities change hands using USD as the payment currency.
While many countries like Iran, Venezuela, Russia, and the European Union have increased ditching the dollar for energy trades, Saudi Arabia’s abandonment of USD would be a blow like not seen in the modern economic era.
However, Saudi Arabia’s threat is easier said than done. As such a move would not only devalue Saudi Arabia’s own foreign exchange reserves, which are mostly in USD, it would lead to a break in Saudi Arabia’s currency peg, which is fixed at 3.75 Riyal per USD.
