Despite brimful oil tanks throughout the industrialized world, the first signals have emerged that the carefully nurtured atmosphere of calm about prices and supply in the wake of the Iranian-Iraqi war may be breaking down.
During the last two to three weeks, prices on the so-called "spot" market have jumped to more than $40 a barrel, eliciting a warning from Saudi Arabian Oil Minister Ahmed Zaki Yamani earlier this week that the world faces the possibility of "another sharp increase" in prices.
With the Organization of Petroleum Exporting Countries' next meeting scheduled in three weeks in Bali, Indonesia, top Western oil and economic officials have issued new appeals to their oil companies to draw on extensive reservies rather than put added pressure on prices by trying to buy more oil.
Underlying the increasing spot prices, Yamani's warning and the appeals to the companies is the fact that the Persian Gulf war has lasted far longer than anticipated, stripping the cushion of supplies that existed before the war and forcing companies and countries to live in prolonged uncertainty about the future.
Easing the short-term pressures somewhat was the report yesterday in Paris that Iraq has informed nine countries of its plans to resume exports of as many as 600,000 barrels a day via pipeline through Turkey. This would still be about 2.5 million barrels a day less than Baghdad had been exporting prior to the outbreak of hostilities. [Details on Page A14].
When the war first broke out two months ago, officials throughout the world quickly pointed out that stockpiles were enormous and that there probably would be no gas lines, no shortages of home heating oil and no industrial disruption as a result of the fighting.
The same officials are just as confident today about the coming winter, but they are beginning to voice some doubts about the longer term.
"For the time being, there is no fear for oil consumption," Keiya Toyanaga, a leading Japanese energy official said this week. "Our problem is how long the war will continue. If it ends this year and the oil starts up again in two or three months, it will be no problem. But if it continues next year, it will have an effect on the world market."
Toyanaga's assessment was echoed by U.S. Undersecretary of State for Economic Affairs Richard Cooper, who said that "some measures" would have to be taken if the war continues for a prolonged period.
While there is no available consensus on the "measures" that might be taken, there is little feeling among experts following the course of the war that it is likely to end soon.
That the war is likely to continue for some time, and with it uncertainty about future supplies, could well cause what one expert called a shifting "psychology" toward the oil market.
"If you are an oil company, uncertainty means that you keep hold of what you have got and go out to try to buy more oil rather than drawing down your supplies," this expert said.
It was toward this perceived shift in attitude that Yamani directed his remarks earlier this week. That exemplifies the looming problems for the international consensus on how to deal with worldwide oil emergencies.
Yamani accused the oil companies of manufacturing what he termed an unnecessary crisis by building up oil stocks.
"If the oil companies resist destocking [using their stockpiles] . . . then we will see another sharp increase in prices," Yamani said.
Companies, on the other hand, say they are reluctant to reduce inventories as long as the war continues because they cannot be certain they will get new supplies when the present ones are gone.
"There is real shortage of oil right now, but there is a glut of uncertainty, and this uncertainty is pushing up spot prices," one oil analyst said.
Close observers of U.S. oil companies also have picked up signals of nervousness about OPEC price increases, noting that prices for gasoline and home heating oil have increased by one to two cents a gallon in the last week. Such increases often anticipate OPEC price jumps.
At the core of these increasing signs of nervousness is basic arithmetic. Before the Iranian-Iraqi war, there was a worldwide surplus of about 2 million barrels a day. When the war began, almost 4 million barrels a day suddenly disappeared.
About 1 million barrels of this subsequently has been made up by production increases by OPEC countries, and are reports that Iran and Iraq are resuming some exports -- as much as 700,000 barrels daily -- brings supply and demand roughly into balance. But that balance leaves no room for future emergency, a prospect bound to create unease among oil companies and strategic planners, according to longtime oil analysts.
Until now, the United States and other major oil consuming nations have managed to stave off talk of another devastating round of price increases. By jawboning and cajoling, they have kept major companies off the spot market and have arranged enough deals and production increases by other OPEC countries to see that countries most dependent on Iran and Iraq for supplies were not hurt.
France, for example, received 500,000 barrels a day from Iraq before the war. It has made up 390,000 barrels of that by diversifying its sources of supply, getting 70,000 barrels daily from Venezuela, 100,000 from Mexico, 120,000 from Saudi Arabia, 50,000 from Abu Dhabi and 50,000 from Qatar. Paris now has the prospect of getting 70,000 from Iraq via the pipeline through Turkey.
The French problem primarily was one of supply and was solved when countries with extra oil offered it for sale and when Saudi Arabia and others in the Persian Gulf region responded to appeals with increased production.
For Somalia, the problem was one of suppply and price. The Somalis were almost completely dependent on Iraq for oil, and they received it at a special rate of $26 a barrel. The Somalis managed to replace the Iraqi oil with supplies mainly from Kuwait and Egypt, but the price rose to at least $32 a barrel, the going OPEC rate. Saudi Arabia generally charged $2 a barrel extra for replacing oil lost from Iraq, while the Kuwaitis tacked on $4.
With help from the international relief agencies, the Somalis have made up the difference in what they have had to pay, but countries such as India and Brazil, dependent on Iran or Iraq for large percentages of imports, have suddenly faced a huge jump in the hard currency payout for vitally needed petroleum supplies.
In 1974, Brazil had a total bill of $12 billion, including 14 percent for oil, to pay for all imports. This year, Brazil must pay $12 billion for oil alone, with petroleum 55 percent of the total. The alternative supplies to make up for loss of Iraqi oil alone meant an unanticipated $2 billion jolt in the last month.
With worldwide inventories running 400,000 to 500,000 barrels higher than normal for this time of year and with economic recession and already higher prices sharply dampening demand, the shuffling of available supplies was handled with relative ease. Officials who labored so hard to avoid a panic at the onset of the war have succeeded so far.
The United States wants to keep the oil rerouting on a strictly informal basis to avoid having any of the 21 members of the International Energy Agency trigger the selective sharing part of the agreement under which available oil supplies are shared on a more formal basis. Officials fear that this would only give impetus to a renewed scramble for oil at any price.