In an effort to halt escalating world oil prices, the Carter administration has launched a quiet campaign to discourage international oil companies from paying more than $18 a barrel for oil on the world market.
Described as "advisory" by one administration official, the effort is targeted at preventing yet another round of price increases from the oil cartel at its March 26 meeting in Geneva.
"The people at [the] State [Department] are advising any of the companies that ask not to buy oil on the spot market," one administration official said.
Last week the Energy Department called on Ashland Oil Inc. not to bid on the sale of Iran's first resumed oil shipments. Ashland, however, turned aside the plea and agreed to pay for Iranian oil selling for more than $18, according to industry sources.
Since then, the State Department has advised a number of companies, including Amerada Hess, an East Coast-based major importer of oil, not to pay more than $18.
the administration's effort to stave off further price hikes was taking shape as Algeria, one of the Organization of Petroleum Exporting Countries' smallest producers, called for a 24 percent price boost, raising the price to $18.50 and becoming the eighth of the cartel's 13 members to call for a higher price, according to oil industry officials.
Yesterday, Energy Secretary James R. Schlesinger Jr. said that Iran, which has ended its 69-day shutdown on exports, is producing 1.6 million barrels a day.
"We do not know the extent to which Iran will come back," Schlesinger said in a morning speech before the National League of Cities. Repeating an earlier theme, he said, "It is quite possible the other OPEC members will cut back their production gradually" as Iran comes back.
In another development, an official of the major companies in the former 14-company oil consortium that operated in Iran said its members are not bidding on oil Iran is selling at auction above the contract price. "We still have a legal binding agreement with Iran," he said.
Before the political turmoil that forced Shah Mohammad Reza Pahlavi to leave Iran for exile, the Persian Gulf state was OPEC's second-largest exporter, sending as many as 6 million barrels a day to western markets.
Because of additional production from other OPEC members, most notably Saudi Arabia, Iraq and the North African states, the total loss to the world oil market as a result of Iran's Islamic revolution has been limited to 2 million barrels a day.
Schlesinger also repeated his view that, "We doubt that Iran's production will ever again approach 6 million barrels a day."
The loss of Iranian oil has forced most American oil companies to cut their deliveries to customers in aneffort to distribute the loss of what DOE estimates is 5 per cent of U.S. oil imports.
Yesterday in Houston, Exxon U.S.A. said that it was joining the list of major companies allocating supplies to dealers. Exxon said that under its allocation system, customers would receive the same amount this month they did during March 1978. (For area impact, see Page C1.)
Schlesinger, during testimony before a House Appropriations subcommittee, also said yesterday that the United States may have to begin drawing down oil from the government's strategic petroleum reserve next winter if the shortage continues.