OPEC's oil ministers split into three distinct camps today in an increasingly tense argument about prices that could cost American consumers an additional $10 billion next year and leave deep scars on the oil cartel's hard-won facade of unity.
In two brief formal sessions and a day of informal contacts, the 13 oil ministers of the Organization of Petroleum Exporting Countries appeared to make no headway in breaking the deadlock on new price proposals that range from $24 to $30 for a barrel of crude oil.
They adjourned this evening after two hours of debate and said they would convene Wednesday for what could be the final attempt to reach a single price for their daily output of 31 million barrels of oil.
The semi-annual price conference, which began yesterday in this South American capital, has quickly turned into a test both of OPEC's ability to maintain the unified price structure that has made it a world economic power and of the continuing authority of Saudi Arabia, the cartel's largest producer and America's closest ally in OPEC.
OPEC supplies about 5 million of the 8 million barrels of U.S. oil imports daily at a cost this year of about $65 billion. A weighted average of the price increases under consideration here would add about 10 cents a gallon to the price of gasoline for American motorists, oil industry analysts said.
Saudi Arabian Oil Minister Sheik Ahmed Zaki Yamani continued to insist today that his country, which is producing 9.5 million barrels a day, would not increase the $24 price it set last Thursday.
Yamani has said that any greater price increase would damage the industrial world's economy and ultimately work against stability in OPEC markets.
Qatar, a small Persian Gulf producer that generally follows Saudi Arabia's lead, attempted today to strengthen the Saudi tactical position by announcing that it would "freeze" its price at $27.42 for 1980. Qatar, the United Arab Emirates and Venezuela joined Saudi Arabia last week in boosting their prices by $6 and demanding that the rest of OPEC fall in line with a Saudi benchmark price of $24.
Qatar and the Emirates assert that they are due a "differential" of $3.42 because of the low sulfur content of their oil.
But signs multiplied today that Yamani's pre-conference price-rise tactics may be backing. Nigeria indicated it would follow the lead of Libya, Algeria and Iran in arguing for a $30 a barrel price. Libya jumped its price to $30 Sunday in response to Yamani's move.
Two key Persian Gulf producers, Iraq and Kuwait, sought a position between the two camps by suggesting in Public comments that they favor prices somewhere above between $24 and $30.Iraqi Oil Minister Tayeh Abdul Karim added indirect but clear criticism of Yamani's tactics by saying the preliminary price rises "have put a number of obstacles" in the way of the effort to arrive at a single price.
Delegates reported privately that open strains between Yamani and Iran's new oil minister, Ali Akbar Moinfar, have contributed to a bogging down of the sessions here. Moinfar, whose authority to make decisions on the spot is questioned by some of his colleagues, has demanded that the meetings be attended by all members of the 13 delegations.
Traditionally, many of the hardest pricing decisions have been reached in closed-door sessions restricted to ministers only.
Yamani is also reported to have brusquely rejected a proposal by Moinfar at the opening session that OPEC-wide production ceilings be discussed here as a device to keep revenues up if prices start to decline in world markets. Three OPEC ministers said in press conferences today that production ceilings would not be discussed here.
But Iraq's Karim suggested that this could change next year if industrial countries start to use the abnormally high oil stockpiles they have accumulated to try to bring prices down. Karim and Venezuela's Humberto Calderon-Beri said oil stocks in industrial countries had reached 700 million barrels as consuming nations moved in anticipation of price rises here and continued trouble in Iran.
Iran "would be the first to call for an extraordinary OPEC conference to cut production to keep a stable balance between supply and demand" if stocks were damaged, Karim said.
But Karim, who empahsized Iran's relative moderation on prices and supply in the past year and its potential role as a bridge between the price hawks and doves, said Iraq had no plans to reduce production, which he said was currently 3.7 million barrels a day, making it the second-largest producer in OPEC.
Yamani held no public sessions with reporters although other ministers held press conferences. The delegates met only perfunctorily this morning to hear OPEC's Economic Commission recommend a new price of $24 or $25. The commission is made up of technical experts and its recommendations are not binding.
The ministers also discussed increasing OPEC aid to developing countries that have been hit hard by oil bills. Calderon said after the evening session that OPEC will add $1.4 billion to existing aid funds.
His remark and public expressions of lack of support from Kuwait, Iran and other countries today appeared to undermine a joint Algerian-Venezuelan proposal yesterday for a $20 billion OPEC bank to aid developing countries.
Karim also said that Iraq has won "acceptance in principle" from other OPEC producers for a quarterly automatic price-fixing system that would set gradual increases, taking into account world inflation, dollar depreciation and other factors. The proposal is expected to be discussed in detail by the group's six-nation Long-Term Strategy Committee here Wednesday.
The drive for an annual, gradual price increase that would do away with the "shock increases" of 1974 and 1979 has been greatly handicapped by OPEC's failure in recent months to impose any true price discipline on its members as spot market prices have shot up to $40 a barrel and some producers have gone through the $23.50 "ceiling" set in the June conference.
Venezuela's Calderon said that the Long-Term Strategy Committee would adopt a final report Wednesday, refer it to a special oil and finance ministers meeting in March and hope to have it adopted at an OPEC summit scheduled for October in Baghdad.
The long-term committee will consider proposals to replace the dollar as the unit in which oil prices are stated by the averge weight of a basket of currencies. Replacing the dollar was not discussed at this meeting, according to five oil ministers who gave press conferences today.
At his afternoon press conference, Calderon laid heavy emphasis on his desire for OPEC to return to the system of small "Differentials" awarded to specific producers of premium high quality oil and the tighter regulation of "surcharges." Producers like Algeria and Libya have pegged their surcharges to tight market conditions and raised their prices to record levels. sWith his remarks, Calderon appeared to be pointing the way toward a compromise in the pricing dispute.
The pricing battle may now be fought out over the complicated system of "differentials" and "surcharges" that OPEC members may charge for their oil, delegates said.
Producers are allowed to charge differentials for oil that is low in sulfur content or which has special transportation advantages. Traditionally less than a dollar, these differentials have soared to as much as $5.50 in recent months. While Saudi Arabia would like to see them trimmed, differentials may be maintained, providing a structure for a base unitary price system with premiums that would keep prices up.
Surcharges have been added by some of the price hawks when market conditions have tightened, allowing them to run up contract prices in relation to the spot market prices in Rotterdam. Maintaining these would also provide OPEC members with more flexibility.