Saudi Arabia's oil minister, Sheik Ahmed Zaki Yamani, said here yesterday that major oil-producing states in the Persian Gulf have agreed with his country to boost their exports to offset losses caused by the Iraqi-Iranian war.
Interviewed here at the end of a two-day swing through the gulf region, Yamani said the United Arab Emirates, a major oil exporter, along with Qatar and Bahrain agreed to support the Saudi plan to increase production. Indonesia, a major Asain oil exporter, reportedly has also agreed to increase exports.
The one question mark among the major gulf states is Kuwait, which is expected not to go along with the Saudis. But kuwait, which Yamani visited yesterday, will not oppose the Saudi plan by decreasing its own production, according to sources here.
Yamani refused to say how much Saudi Arabia would increase production, which is already running 1 million barrels a day above its preferred ceiling. He said the amount of increase depends on how severely the world market is affected by the absence of oil from Iraq and Iran.
"We will play it by ear," he told Reuters news agency in the Emirates city of Abu Dhabi, where he stopped last night. He also visited Doha, the capital of Qatar, this morning and returned from here to Saudi Arabia this afternoon.
Both Iraq and Iran have stopped exporting oil as a result of their two-week-old undeclared war, in which major damage was done to both countries' oil installations.
While Iran had become a negligible exporter of oil -- putting an estimated 700,000 barrels a day on the world market compared to the peak 6 million barrels a day it sold before the overthrow of the late shah in February 1979 -- Iraq was the world's No. 2 exporter behind Saudi Arabia until the conflict with Iran broke out.The loss of its oil is expected to be keenly felt by many countries.
Oil experts believe the current glut on the world market will protect most countries from immediately feeling the pinch from the loss of Iranian and Iraqi petroleum. The United States, for example, is believed to have a 100-day reserve, and no shortages are expected within the country for the next month.
But countries which depend heavily on oil from Iraq and Iran -- especially France, Italy, Spain, and India -- are expected to be forced to go to the more expensive spot markets for future supplies. India, which got two-third of its oil imports from Iraq and Iran, has said it is looking for replacements on the spot market.
The price of oil on that spot market in Europe has already started to rise as a result of the fighting. High-quality North African crudes, for example, are now selling at $37 a barrel -- $4 more than before the fighting started, according to the Middle East Economic Digest.
More buying pressure by countries that normally depend on Iraq and Iran for oil could drive the prices up even more and disturb Saudi hopes of getting a common price for all 13 OPEC countries.
Saudi Arabia, the world's leading oil exporter with output of 9.5 million barrels a day, announced its plan to increase production earlier this week.
Yamani talked yesterday to Emirates Oil Minister Mana Said Oteiba, who agreed that his country was prepared to boost its oil production.
The switch came after many OPEC nations made a gentleman's agreement to cut oil production by 10 percent until the world glut was used up. But in the wake of the fighting between Iran and Iraq, most of those countries decided not to cut their production. Now, led by Saudi Arabia, it appears as if they will produce more.
Both Kuwait and the Emirates cut production earlier this year and have spare capacity. Kuwait, which exports about 1.2 million barrels a day, is believed to have the potential for 500,000 barrels a day in further production. b
Iraq normally produces 3.4 million barrels a day and exports almost all of that.
Qatar is a minor producer as far as the gulf states are concerned -- exporting 460,000 barrels a day of the 500,000 barrels it produces.
Bahrain, which has emerged as a major banking and service center for the gulf, is not an OPEC member. It produces only 50,000 barrels of oil a day and its support of the Saudi plan is considered more symbolic than real.
News services reported these related developments:
Nigerian President Shehu Shagari said in an interview that his country intends to go ahead with plans to decrease oil production despite the drop in supplies created by the Iran-Iraq war.
Nigeria is the United States' second largest supplier of foreign oil.
Shagari, interviewed on the CBS "60 Minutes" program, said "OPEC has agreed not to increase, but to decrease production in order to maintain our prices. And that is the policy that Nigeria is going to follow."