One of the members of the Organization of Petroleum Exporting Countries that set its price last week at $24 a barrel -- the lowest among all Opec nations -- has broken ranks and may move to $26 Jan. 1.
By itself, a $2 increase by this OPEC member, Venezuela, would have relatively little impact in the United States. Venezuela is not that big a U.S. supplier.
But the impact could be great if it proves to be the trigger for yet another round of price increases by other OPEC members, particularly Saudi Arabia.
In advance of the semiannual OPEC pricing conference in Caracas, Venezuela, Saudi Arabia and other "moderates" agreed on $24 for the first half of 1980. Their purpose was to prevent "radicals" such as Libya from setting a still higher "benchmark" price for all 13 members of the cartel to observe.
They failed.The conference broke up last Thursday without a price agreement. This cut each member free to seek whatever price it could get -- at a time when consumer countries are vying with each other for supplies, and when the spot market price is $40 a barrel.
Even before the meeting began, Libya raised its top price from $26.27 to $30. Algeria and Nigeria, the other major African producers, then also went to $30. Iran announced a policy of charging $4.50 more than the benchmark. This resulted in an increase from $23.50 to $28.50.
Venezuelan President Luis Herrera, in a statement after the meeting ended, said that after 1979 his country's price "will be above the $24-a-barrel level."
The newspaper El Diario de Caracas then quoted Venezuelan government sources as saying that the price starting next Tuesday will be $26.
Since July 1, Venezuela's price has been $20 and Saudi Arabia's $18. Thus a $26 price for the former would provide the same $6 increase as a $24 price for the latter.
Seen this way, the new Venezuelan increase is simply the restoration of a previous price relationship and the start of a new round of increases.
Saudi Arabia's oil minister, Sheik Amed Zaki Yamani, pledged last week to maintain the $24 price "as long as possible" and "at least through January."
In a phone interview, James E. Akins, former U.S. ambassador to Saudi Arabia, said that Yamani wants to see whether consumer countries will take all of the oil to be offered at $26 to $30 by Algeria, Iran, Libya and Nigeria.
If the consumer countries should do this, Akins said, there will be "great pressure" on other OPEC courntries to raise their prices over $24. But there could be an excess of supply over demand that would allow consumer nations to turn away from the highest prices, he said. In this regard, he said one crucial factor is whether Iran maintains production.
In New York City, Walter J. Levy, an international oil analyst and consultant, essentialy agreed with Akins' analysis, adding that as of now, Yamani "wouldn't know what he'd be doing [in February] any way."
In Washington, an administration source said: "There will be no surprise if the Venezuelans raise their price, but we will be very surprised if the Saudis do."
At gasoline pumps in the United States, the new prices unilaterally set at Caracas will add four cents to eight cents a gallon next year.
If Saudi Arabia should raise its Jan. 1 price from $24 to $26, as Venezuela now is expected to do, and if all other OPEC members' prices should hold steady, the pump price here would go up about another penny. But an increase by Saudi Arabia, largest OPEC producer, could trigger further increases by other OPEC members.