The Domestic Energy Producers Alliance is petitioning the United States to pursue an anti-dumping case against Saudi Arabia and Russia for oil price manipulation after a price war erupted between the two countries Friday of last week.
DEPA is a national collaboration of 34 coalition associations that represents 10,000 individuals and companies engaged in domestic onshore and natural gas exploration and production. Its chairman is Harold Hamm, who is also the Executive Director of Continental Resources, a top producer in the Bakken.
DEPA’s anti-dumping petition would seek an anti-dumping or countervailing duty investigation into crude oil price manipulation by Saudi Arabia, Russia, and other involved countries. It will be filed with the United States Department of Commerce and the United States International Trade Commission.
Hamm said the petition is necessary given recent actions by Saudi Arabia and Russia to increase their supply of crude oil at prices below market value, resulting in material injury to the U.S. domestic crude oil industry.
“This is a direct attack on U.S. oil and gas producers,” he said. “They are taking advantage of this coronavirus pandemic that is sweeping the world to focus on this industry and to devastate it. These actions warrant the imposition of antidumping and/or countervailing duties on crude oil imported to the United States from these countries. Saudi Arabia’s and Russia’s actions have already, and will continue to harm U.S. domestic crude oil producers and industry.”
It’s now the second time in five years that Saudi Arabia, an OPEC member, has tried to eliminate oil and gas competitors by keeping global prices very low. In this case, Saudi Arabia announced it would not only cut its crude oil prices to Europe and Asia — markets of particular importance to Russia — but ramp up its production 2 million barrels per day after Russia refused to agree to production cuts of 1.5 million barrels per day.
Russia, meanwhile, has announced it will increase production by 500,000 barrels per day.
These actions will send a huge bubble of new oil into an oversupplied market that was already facing declining demand amid travel restrictions and factory suspensions that were aimed at curtailing the spread of coronavirus. The announcement shocked crude oil markets on Monday, which crashed 31 percent before settling at a 26 percent drop by close of business Monday.
The volatility has prompted some Bakken companies to cut planned 2020 capital expenditures.
It has also sparked discussions at the White House about potential measures to aid the oil and gas industry, particularly it’s small to mid-cap producers.