The Organization of Petroleum Exporting Countries today effectively froze oil prices at their current levels for another six months.
Since Saudi Arabia and Iran - which together produce almost half the world's oil exports refused to go along with any price increase, oil ministers of the 13 OPEC nations were unable to agree on even a modest hike from the present $12.70 a barrel.
"The member countries were unable to reach a common consensus on this issue," OPEC Secretary General Mohamad Jaidah said. "Therefore, the present prices will continue."
The freeze was expected to bolster efforts to hold down world inflation, which has been spurred by several oil price increases since 1973.
While unable to reach a consesus on the princing issue, an official communique said, the participants left open the possibility for a meeting of oil ministers or heads of state to "review prices." The next scheduled meeting is June 15, but no site was designated.
The price freeze was not formally adopted because of the disagreement between the two largest producers and such members as Venezuela and Libya who adocated price increases ranging from five to 23 per cent.
There were few outward sings of the division, however, although the Libyan oil minister said that his country was considering a unilateral price increase.
The crucial role in the outcome of the meeting here was played by Iran, which had advocated higher oil prices in previous years. With the Saudis and the Iranians on the same side of the pricing question, there was virtually no chance for smaller oil producers to push through any price hikes.
A variety of strategic and economic reasons also seems to have persuaded the majority of OPEC members against any immediate price increases, including the fact that the coherence of the Arab bloc within the cartel had been profoundly shaken by their differing attitudes toward Egypt's Middle East peace initiative.
Sheik Ahmed Zaki Yamani, the Saudi oil minister who led the demands for a price freeze here, also noted another crucial factor. "There is a surplus [of oil] now and that's why OPEC couldn't reach consensus," he said.
There have been divisions withint the cartel in previous years but the organization was able to eventually overcome them.
In Washington, a senior administration official welcomed the freeze. "We would hope and expect that the six-month price freeze would be extended for all of 1978" he said.
Oil prices are currently set at $12.70 per 42-gallon barrel for the so-called "marker" light Saudi Arabian crude that is used as the OPEC reference point. Prices have been frozen at this level since the OPEC meeting last July in Stockholm.
At Stockholm, Saudi Arabia and United Arab Emirates agreed to end the pricing rift resulting from the January 1977 meeting at Doha, Qatar. At the earlier meeting the two conservative Arab countries raised prices by 5 per cent while the other 11 members bled by Iran boosted prices by 10 per cent.
Qatar's oil minister, Khalifa Thani, told a group of reporters after today's meeting ended that "the freeze will be for six months, we will meet again in June to decide on prince."
Thani, OPEC's outgoing president said he doubted that there would be a meeting of OPEC heads of state to discuss prices as proposed by President Carlos Andres Perez of Venezuela at yesterday's opening session. Perez had called for a 5 to 8 per cent increase with the revenues set aside for Third World countries.
Saudi Arabia's Yamani, speaking to reporters after the session, said that other countries would be free to raise prices only after the current surplus of oil was reduced. He added that there was no need for OPEC to program its production because Saudi Arabia was taking responsibility for regulating supply to match demand.
"Saudi Arabia is taking responsibility for fixing prices," he said.