Four oil exporting nations, in a new round of price leapfrogging among OPEC members, were reported yesterday to have adopted new increases. with Libya's crude set to reach nearly $35 a barrel on Jan. 1.
The increases are expected to add 2 to 3 cents a gallon on U.S. gasoline pumps on top of the expected 4 to 8 cents a gallon U.S. consumers will pay next year as a result of a series of uni-laterally set price increases announced during or before the Caracas meeting of the Organization of Petroleum Exporting Countries earlier this month.
Libya's action, reported in Petroleum Intelligence Weekly, raised the prospect of new unilaterial increases. The new Libyan charge is more than $10 higher than the $24 per barrel figure adopted this month by Saudi Arabia, OPEC's largest producer.
In addition to Libya, Venezuela, Indonesia and Iraq were reported yesterday to have raised their prices by up to 10 percent, effective Jan. 1. The four countries provide almost 10 percent of U.S. oil import requirements.
The new oil price surge follows the deadlock at the Caracas meeting where the 13-nation cartel abandoned its unified pricing system. The semi-annual OPEC meeting last July had set a pricing system ranging from $18 to $23.50 per barrel. Several members raised their prices above the $23.50 ceiling last October, and the Caracas meeting failed to establish a new joint range of prices.
Analysts here voiced concern that the Libyans, who raised their price by $4.72 to $34.72 a barrel, may force high prices on Nigeria and Algeria, which usually set their prices close to those charged by Libya. Nigeria already is charging $30 per barrel.
Libya, Nigeria and Algeria supply about one-third of total U.S. oil imports . If the two countries follow Liyba's lead, the average price of a barrel of OPEC oil could come close to $30, up from $26 last week and $22 in November.
Yesterday's Venezuelan announcement was expected, according to analysts here, while the Indonesian price boost came as a surprise.
Indonesia, which accounts for 2 percent of U.S. oil imports, boosted its price by $2 to $27.50 per barrel. Venezuela raised its price by $2 to $26 a barrel. Earlier this month, the Venezuelan government raised its basic average price from $18 to $24.
Petroleum Intelligence Weekly also reported that Iraq, a major oil producer that accounts for 12 percent of OPEC's output, also boosted its basic price by $4 to $26 per barrel retroactive to Dec. 1. Iraq, however, exports relatively little oil to the United States.
The Iraq move put Baghdad between the inoderate Saudis, who charge $24 for their oil, and the militant new regime in Iran, which charges $28.50. The Iraqis, however, have set their differentials about $4 higher than the Saudi basic price.
There were reports yesterday that Saudi Arabia may increase its basic price by $2 to $26 per barrel. Saudi Oil Minister Sheik Ahmed Zaki Yamani, who was in Paris, was quoted as saying that "no decision has been taken."
But Yamani added, "Oil prices are currently below those prevailing on the international market."
Yamani suggested that the expected worldwide economic slowdown next year may conceivably trim oil demand and drive prices to somewhat lower levels. But industry sources discounted that view, arguing that OPEC militants may reduce their production and keep prices at the new high level.
The new prices announced by Venezuela, Iraq and Indonesia were seen as largely restoring the earlier differentials that were in effect between their prices and that of the Saudis prior to the Caracas meeting. Differentials are charged according to a crude's quality and proximity to markets.
Venezuela's highest grade will cost $28.75. Iraq's high grade will go to $26.18 from $22.18. Indonesia's high grade price is set at $30.75 per barrel. $2