Several oil ministers of the Organization of Petroleum Exporting Countries sought today to cast yesterday's OPEC decision to maintain prices and cut products as an invitation to Saudi Arabia to end its isolation from the cartel's price hawks when it feels ready -- but preferably before the December price-fixing meeting.
The Saudi oil minister, Sheik Ahmed Zaki Yamani, said today that despite pressure within OPEC for a Saudi price rise, an increase "is not on the agenda" in his country.
Nevertheless, several oil ministers told reporters that they understood that the Saudis would move up in price and down in production within the next six months, but the Saudis have made no firm commitment to do either. t
The OPEC ministers, unable to come closer together on their prices, simply agreed yesterday to extend their current pricing structure, which sets a price of between $32 and $36 for a barrel of average-quality crude oil and allows for differentials to be added up to a ceiling of $41 a barrel for high-quality oil.
Significantly, however, the $32 base was not mentioned in Tuesday's final communique. Subroto, Indonesia's minister of mines and energy and the OPEC conference president, said today that lower figure intentionally was not mentioned "to leave the door opened to the Saudis" to raise their price later in the year.
Several OPEC ministers today confirmed that the conference had considered an arrangement under which the price of Saudi light crude oil would rise to $34 per barrel in return for a drop in the price of high-quality oil produced by Libya, Nigeria and Algeria from $40-41 to $39 per barrel.
But the North Africans refused to cut the price. Another motion that would have pegged the price of average crude at a uniform $34 also encountered resistance from OPEC countries that price their oil higher.
If the Saudis do eventually raise their price, other OPEC ministers anticipate that agreement could be reached on a uniform price in December. "I think what emerged was a better understanding of the positions of each other," said Kuwait's oil minister Ali Khalifa Sabah. "I hope this understanding sets a foundation for broader agreement in December. Sabah said he would favor a uniform price of $36.
A unified OPEC price for average-quality crude is considered a prerequisite for adopting a long-term pricing formula that would tie the price of OPEC oil to a mix of world economic factors. The formula now being considered is part of a long-term strategy under review by a special OPEC ministerial committee led by Yamani.
A long-term view is taken by such countries as Saudi Arabia, the United Arab Emirates and Iraq, which have large oil reserves and thus an interest in keeping prices moderate in order to maintain the competitiveness of oil against other sources of energy. A shorter term view is held by Libya, Nigeria and Algeria, whose lesser oil reserves and large investments tend to make them more interested in higher prices and short-term profits.
"In the very long term, it is difficult to reach agreement because our interests are different," said Venezuelan Oil Minister Humberto Calderon Berti. Differences in view tend to be aggravated in times of surplus, as now.
There was some question today how far the agreed cuts would go toward reducing the existing glut.Estimates of the effects of the promised reductions by ministers ranged from 1 million barrels per day to 1.5 million barrels per day. The general market surplus is currently estimated variously at between 1.5 billion and 3 billion barrels daily.
Also unclear were the levels from which production cutbacks would be figured. A list of the new ceilings made available by conference sources, indicated that some allowance would be made for those countries that recently trained production. Several ntions -- including Ecuador, Indonesia and Nigeria -- agreed to cut less than 10 percent from their official ceilings, while others -- including Kuwait and Qatar -- were reported to have agreed to reduce their production by as much as 17 percent.
Perhaps the most significant outcome of the meeting, however, was not what was decided but what was said about the need to reconsider OPEC policy in view of what appear to be permanent changes in the world demand for oil. Unlike earlier surpluses in the 1970s, which were shortlived, the current glut was seen by oil ministers as more troublesome because it stems in part from a development of conservation measures and switchovers to alternative energy sources.
In the span of two years, covering the Iranian revolution, the Iranian-Iraqi war and recession in the West, the world's oil market has swung sharply from shortage to surplus. OPEC's challenge now is to find a pricing-and-production program that will steer between market extremes while also taking account of the differences in long- and short-term views of the market among member nations.
"We have not hit on a golden formula," said Kuwait's Sabah, adding that one may not be possible. "I think the best way to describe it is that we are trying to muddle through."