The National Iranian Oil Company announced today a surcharge of $1.80 to $1.90 on the price of Iranian crude oil.
The new prices, $16.57 for a barrel of Iranian light crude and $16.04 for Iranian heavy, represent a rise of more than 11 percent since the last price increase was set April in a special session of the Organization of Petroleum Exporting Countries, Since last December, the average price of Iranian oil has gone up about 23 percent, or $3.76 a barrel.
The price-increase announcement coincided with an Iranian statement that crude production has risen to 4.7 million barrels a day, a rate now approaching the country's average production capacity of some 5.8 million barrels a day before the overthrow of the shah.
The combination of higher prices and increased production could help the revolutionary government overcome the country's economic woes. Of the 4 million barrels of crude oil available daily for export - about 700,000 barrels a day are used domestically - only about 2.4 million are being sold to foreign buyers, however, according to industry sources. The rest apparently is being stored, they said.
In the current tight world oil market, the Iranians should have no difficulty selling all the crude they have available for export, industry sources said. If production continues at the present level or goes up, they said, it will eventually relieve some of the upward price pressure, since the lack of Iranian oil late last year was the main cause of the present world shortage.
"It's a sellers' market now because Iran hasn't been producing at normal levels for a long time," one expert said. "But if Iran comes back and produces 5 million barrels a day, that situation is going to ease up appreciably." He said the market is unlikely to get "sloppy soft" because oil inventories have been drawn down and buyers need to start stocking up for next winter. Therefore, he said, the new price increases can be expected to hold for at least this quarter.
International oil companies, including several American ones, have been negotiating to buy crude from Iran at the new price. One deal just signed with a U.S. company was for between 200,000 and 250,000 barrels a day, sources said.
Despite a strong current of anti-Americanism during Iran's revolution against the shah, Iran's oil industry, under the new rulers, so far has shown no discrimination against U.S. buyers and more contracts are expected to be signed in the coming weeks.
It remains to be seen, however, how these agreements will be received by revolutionaries who have vowed to oppose such dealings with countries they regard as "imperialist."
So far, Japan is the leading importer of oil from Iran, with contracts for purchases totaling some 600,000 barrels a day. Ashland Oil of the United States, British Petroleum, Compagnie Francaise des Petroles, Royal Dutch Shell and Brazil's Petrobras also are major customers. Iran is expected to continue selling oil to India, Bangladesh and to Eastern Furope.
With the national oil company making its own sales arrangement, it is increasingly unlikely that an old agreement with a 14-company Western oil consortium will be revived. Nevertheless negotiations between Iran and the consortium are expected to start within a month, informed sources said. They also said a $3 billion plan for Iran to sell liquefied natural gas to Columbia Gas Co. of Delaware has been scrubbed.