Strong pressures for a substantial new rise in world oil prices built here today as the 13 oil ministers from the Organization of Petroleum Exporting Countries opened a crucial meeting.
Price rises being discussed by the ministers ranged rougly from 5 to 20 percent above increases already planned for this year. If put into effect, these additional increses could have further negative effects upon inflation in the United States and the strength abroad of the U.S. dollar.
The meeting, expected to end tomorrow, is being held behind closed doors. But it was clear from the brief access reporters had to ministers that an overwhelming majority favored some kind of a price increase to compensate for inflation and for the sinking value of the dollar, which is used to pay for oil, and to allow OPEC countries to catch up with higher oil prices already being paid elsewhere on the world market.
The only public call for freezing oil prices at current levels was from the Saudi Arabian oil minister, Sheik Zaki Yamani. But he acknowledged this would be "an extremely difficult possibility."
Late tonight Yamani told reporters that the meeting appeared to be "almost deadlocked" on the issue of oil price increases, with some delegations adopting "very extreme positions."
Saudi Arabia, the largest and most important oil producer in the world, traditionally has been the most moderate and pro-Western Arab nation within the oil carte. While Yamani's voice still carries considerable weight here, it is widely held that the Saudis cannot go out of their way at the moment to help the West because of their annoyance over the U.S. role in the Middle East peace settlement and their unceratinty about the U.S. role as protector in the Persian Gulf after the fall of the shah of Iran.
The meeting here was originally planned only as a consultative session meant to consider what to do about the upheaval in oil prices, politics and profit-taking that has followed the overthrow of the shah and the sharp cutbacks in Iranian oil deliveries to world markets.
There was some prospect that the participants would decide to set new prices, although it still was not clear when the first day's talks ended late tonight whether that would take place hefe or if a new meeting or other technique would be used to allow prices to rise.
The meeting has taken on perhaps as much importance as any since the 1973-74 Arab oil embargo because it coincides with the signing in Washington of the Egyptian-Israeli peace treaty, which is bitterly opposed by OPEC's Arab states and which could fuel emotional arguments among hard-line Arab representatives here.
The meeting is also the first to be attended by the new revolutionary Islamic government of Iran.
Officially, a barrel of OPEC oil now sells for $13.335. The price is scheduled to increase to $13.843 on April 1 and to $14.542 by the end of the year under an agreement reached at the last OPEC meeting in Abu Dhabi last December.
Since that meeting, however, Iran, which was the world's second largest exporter under the shah, had its pumps shut off for more than two months. Even though it has resumed limited exports, there is still a roughly 2 million barrel-a-day drop in world exports. At the same time Western consumption, especially in the United States, continues to rise.
The disruption in production has created a situation in which so-called "spot market" prices -- for oil under conditions of high demand and short supply -- have been reaching more than $18 a barrel. Many OPEC members apparently would like to see their own prices rise to this spot market price and many already are adding surcharges on their oil.
Cyrus Ebrahim Zadeh, adviser to the new Iranian government's energy ministry, told reporters today that his government favored an immediate increase to $17.20 per barrel.
This would represent a 20 percent increase over the previously planned price for the end of 1979 and about a 35 percent increase over the price at the end of last year.
In a speech to the ministers, made available to reporters, Iranian oil Minister Ali Ardalan blasted both the shah and those who supported him in the West for "ruthless exploitation" of Iran but said he did not come here to take revenge.
Rather, he called for raising the price of oil to a "fair and reasonable level," although he acknowledged that such a move would only serve to weaken the dollar again. He called on the U.S. government to "consider ways of fixing the dollar parity rate and keeping it constant."
To prevent an oil glut which once again would cheapen OPEC oil resources, the Iranians also proposed that OPEC reduce total export below the 1978 level if the United States and other Western countries make good on their recent pledge to reduce consumption.
Zadeh later told reporters that Libya, Iraq and Algeria supported such an OPEC export cut and that Saudi Arabia did not raise objections.
In effect, what has happened since the last OPEC meeting and the Iran crisis is that supply has dwindled while demand and prices that oil-short consumers are willing to pay on the open market have skyrocketed beyond the dreams of even the most militant OPEC members.
This has produced huge profits for some oil companies and traders dealing on the spot markets and generated antagonism toward them within OPEC. Today, several ministers spoke of taking actions against companies making large profits and perhaps blacklisting them.
These spot markets also reflect loss of price leadership by OPEC, something it would like to bring back under its control.
Mixed into all of this are the varying self-interests within the organization. Many moderate countries with huge holdings in U.S. dollars, such as Saudi Arabia, would like a balanced solution so as not to damage those holdings. Militant states have little sympathy for Western problems.