A proposal for voluntary cutbacks in oil production by members of the Organization of Petroleum Exporting Countries ran into trouble today as nearly half of the group's members resisted the plan.
Hopes for even a partial accord to cut production and prop up prices appeared to depend on whether Saudi Arabia could persuade a substantial majority of members to reduce output temporarily, and on whether the Saudis would be willing to act without a unanimous agreement.
Nigerian Petroleum Minister Rilwanu Lukman, who holds the rotating position of OPEC president, announced this afternoon that an initial survey of oil ministers had determined there was willingness to make voluntary reductions totaling 1.6 million barrels a day from OPEC's current overall output of about 20 million barrels a day.
But Lukman acknowledged that that was not enough, saying, "Our aim is to continue our efforts until we reach a figure that we think is satisfactory."
Indonesian Energy Minister Subroto, an influential mediator at these conferences, was continuing consultations with ministers in hopes of attracting more support for the plan.
Oil traders and other industry specialists have predicted oil prices would drop sharply, possibly to their lowest levels since the early 1970s, if this conference breaks up without an agreement to restrain output.
"They need to come up with between 2 million and 2.5 million barrels a day in total reductions to stop a crash in prices," a U.S. trader, who was attending the meeting as an observer, said. "In the Persian Gulf, the price would go down to $5 a barrel from $7 currently" if there is no agreement, he said.
OPEC has failed three times this year to agree on a system of fixed output quotas to mop up the glut of excess oil that is depressing prices.
At this meeting, Saudi Arabia and its gulf ally Kuwait are pushing a plan to dodge the question of fixed quotas by seeking what are being called "voluntary, temporary" production cuts as a stopgap measure to bolster prices. Efforts to reach agreement on fixed quotas then could be delayed until a later meeting.
The Saudis have expressed their own willingness to reduce output on a voluntary basis, perhaps by 1 million barrels a day from current estimated output of 6 million barrels a day. Kuwait also has said it is willing to make a "significant" output cut.
Algeria, Libya and Iran, who make up the faction that most consistently opposes the Saudi-led majority, have rebuffed the plan for voluntary cutbacks. They want a sharp reduction in OPEC production to at most 16 million barrels a day, with fixed quotas that would place most of the burden of the cutback on Saudi Arabia and its allies.
Venezuela, Iraq and the United Arab Emirates have joined those three countries in resisting voluntary output cuts, delegates said. The opposition of the United Arab Emirates was unusual, because it usually follows the Saudis' lead on oil policy.
Algerian Energy Minister Belkacgm Nabi said today that he considered the plan for voluntary cutbacks to be a diversionary tactic by the Saudis to avoid having to make any output cuts at all.
"If they want to do it cut production , why don't they do it?" he asked.