Blizzards in the eastern, United States and wind storms in the Persian Gulf significantly lessened Saudi Arabia's ability to pressure other oil producers into lowering their prices in the past six weeks.
American consumption of petroleum jumped five per cent in response to January's cold weather. In Persian Gulf, Saudi Arabia fell 20 per cent below its stated target of producing 10 million barrels of oil a day, evidently because bad weather hindered loading schedules.
The result has been to wipe out a huge pool of surplus oil that was building up in world markets and to hold oil price increases steady, despite the split in December within the Organization of Petroleum Exporting Countries over pricing.
The Saudis say, however, that they will continue their effort to hold prices down by limiting their price increases to 5 per cent and increasing production sharply. They are supported in this policy by the neighboring United Arab Emirates.
OPEC's other 11 members decreed a 10 per cent increase in wholesale crude oil prices effective Jan. 1 at the December meeting in Doha, Qatar. They have vowed to cut back production when necessary to meet the Saudi challenge on prices.
The two-tier pricing system is only now beginning to undergo its first serious testing, and energy experts predict that it will be several more months before its impact can be gauged.
The first barrels of oil loaded on tankers in the Persian Gulf after Jan. 1 began arriving in western Europe and the United States in the past week to 10 days.
But hundreds of millions of barrels of oil with two different price tags are now bearing down on governments that have given no clear-cut guidance on how, or even if, they and oil companies will attempt to pass on the "savings" Saudi Arabia said it wanted to provide consumers through its decision.
The 18-nation Internatoinal Energy Agency appears to be advising its members to wait and watch the two-tier system at work for several months before making firm policy decisions about pricing on OPEC imports.
While cautioning against drawing conclusions from one month's operation of the two-tier system, energy experts and industry sources agree that several points did become evident in the atypical conditions of January.
Saudi Arabia's effort to hold OPEC prices down is having no effect on the low sulpher "sweet" oil used primarily for gasoline. Production has been near normal in Libya, Algeria, Nigeria and Gabon, which have been able to make the 10 per cent increase stick without any problem.
The Saudis demonstrated that they could quickly boost production to 10 million barrels a day and play havoc with the sales performances - and revenues - of Iran, Kuwait and Iraq. But after two weeks of pushing these three countries to the wall, Saudi production suddenly dropped and pressure eased on the Saudis' Persian Gulf neighbors.
Their monopoly over the great majority of the lower-priced American oil companies a major say in which consuming countries get any benefit from the Saudi price break. Energy experts note that some consuming countries are already becoming wary of attempts by others to "grab" more than a normal share of "cheaper" oil.
Together Saudi Arabia and the United Arab Emirates one-third of the 31-million-barrel-per-day average produced by OPEC members last year. With some exceptions, most of the major industrailized non-Communist nations get between 30 and 40 per cent of their oil from Saudi Arabia and the Emirates.
Saudi Arabia's muscle in the oil industry stems from its vast reserves and the 11.5-million-barrel-a-day capacity it installed before OPEC quadrupled prices in 1973 and made it unnecessary for a sparsely populated country like Saudi Arabia to raise production to meet its budget and reserve requirements.
But the excess production capacity is largely in the heavy crude oil of the Persian Gulf. The contest over the 5 and 10 per cent increases comes down essentially to a struggle between the Saudis and Iran, OPEC's second largest producer, for sales of heavy crude used for heating and industrial fuels.
Last month, before the surplus in world oil stocks was run down, the state-owned National Iranian Oil Co. announced that Iran was losing nearly 10 per cent of its expected oil sales - more than $6 million a day - because of price undercutting by Saudi Arabia and the Emirates.
In anticipation of the Jan. 1 price rise, oil companies added several hundred million barrels of oil to their normal stocks late last year, industry sources report. Almost all of the pre-Qatar price rise purchases have been delivered now.
In early January, the Saudis moved their barrel-per-day production up from their 8.5 average for 1976 to more than 9 million, and reportedly topped 10 million at least once.
Energy experts estimate that the exta stockpiling and growing Saudi production put a surplus of about 4 million barrels of oil a day into the pipe-line at that point. Orders fell for Iranian and Kuwaiti crude, forcing them to cut production and revenues back nearly 30 per cent to keep the price they were demanding firm.
But Saudi loading terminals virtually shut down for the last two weeks in January, dropping the monthly average loaded to 8.2 million, lower even than the 9.1 million barrels a day posted in December. Saudis and foreigners who visited the area report that wind storms made loading impossible for much of the month.
At about the same time the United States was drawing down its oil stockpiles and generating a record 8.7 million barrel average daily demand for imports during January. Iran was able to finish the month with an average export of 5.1 million barrels a day, a diminished but still respectable showing.
Most consuming countries seem to be prepared to wait to see if Iran, which insists it will not rescind the 10 per cent increase and Saudi Arabia, which reportedly will not go above 17 per cent as an annaul increase, will strike a compromise.
Some approaches to the thorny problem of passing on the new costs have already emerged. French officials have pledged to try to keep the increase here down to 5 per cent, to support Saudi Arabia's "moderation." Energy experts doubt that this effort will succeed, since France obtains only about 40 per cent of its imports from Saudi Arabia and the United Arab Emirates.
Britain has aligned the price of its North Sea oil with the higher 10 per cent tier, from which British-controlled oil companies draw the major part of their imports. In the United States, the Federal Energy Administration has suggested that it will require oil companies to "equalize" the difference in rates of increase and come out with a compromise price hike.