Saudi Arabia is reportedly mulls stripping US dollar from oil trade

Saudi Arabia is the world’s largest oil exporter, and its total crude output is surpassed only by U.S. and Russian production. It pumps enough oil to meet about 10 percent of global demand, while OPEC fulfills about a third of global consumption.

“The Saudis know they have the dollar as the nuclear option,” one of the sources told Reuters.

The Saudi embassy in Washington did not immediately return CNBC’s request for comment. The Saudi energy ministry and U.S. Department of Energy did not respond to Reuters. The State Department told Reuters it does not comment on pending legislation.

The NOPEC legislation would amend existing U.S. law, allowing the Justice Department to sue foreign countries for working together to limit oil supplies and influence prices.

That represents an existential threat to OPEC. The 14-nation producer group regulates global oil supply by setting output limits for each member during times of oversupply.

Capping output pushes up the cost of crude. Since OPEC nations depend on oil revenues to balance their budgets, the line between balancing the market and filling domestic coffers has always been blurry.