The Persian Gulf's Arab oil producers said they agreed today to cut their oil prices. But they delayed announcing the new price, apparently hoping that talks with other exporters might achieve a uniform reduction and avert a full-scale price war.
Ministers indicated after a meeting in Riyadh, Saudi Arabia, that they would seek a consensus within the Organization of Petroleum Exporting Countries at yet another emergency session in Geneva or Vienna next week.
Saudi Oil Minister Ahmed Zaki Yamani, speaking after today's meeting of five gulf Arab members of the 13-nation oil cartel said that they, and a sixth OPEC member not present, Indonesia, now agreed on a reduction in the cartel's official price of $34 a barrel. But he refused to disclose the amount of the planned reduction. "In principle, there will be a reduction," he said.
In addition to Saudi Arabia, Kuwait, the United Arab Emirates, Iraq and Qatar, Yamani said Indonesia was "in complete agreement" following a telephone conversation he held with Indonesian Oil Minister Subroto. Subroto and Venezuelan Oil Minister Humberto Calderon Berti were reported to be flying to the Saudi capital to join the meeting of the gulf Arab oil producers. There were conflicting reports on whether Libya was also sending its minister.
In Vienna, the OPEC secretariat reported that the current president, Yahaya Dikko of Nigeria, consulted with other oil ministers to determine the time and place of a meeting, The Associated Press reported. United Arab Emirates Minister Mana Said Oteiba said contacts would be made with non-OPEC exporters Mexico, Britain and Norway in coming days to coordinate positions.
Treasury Secretary Donald T. Regan, in testimony before Senate Foreign Relations committee said of declining oil prices, "There are more oil-importing nations than oil-exporting nations. . .there will be more winners than losers." He also suggested that lower oil prices should mean lower inflation and, coupled with "sensible" monetary and fiscal policies, should mean lower interest rates as well.
Spot prices for crude oil, gasoline and heating oil reportedly firmed on world markets because traders had been hoping that the gulf producers would announce a price cut.
The ministers of Qatar and the Emirates left Riyadh after the announced agreement, but Yamani said the ministers from Saudi Arabia, Kuwait and Iraq were empowered to "represent them" in continuing talks here with other OPEC members.
The invitation for Subroto and Calderon to join the Riyadh talks appeared to be a maneuver by Yamani to build a consensus among a majority of OPEC's 13 members before going into a showdown with Nigeria and other producers that have cut prices unilaterally to keep up sales in the glutted world market. Non-OPEC members Britain and Norway announced a $3 price cut Friday, and Mexican officials have said they will lower prices by the end of this week.
Saturday, Nigeria, the first OPEC member to break ranks, declared a $5.50 reduction in the price of its top-quality oil to $30, upsetting the OPEC pricing structure and bringing the world's principal exporters to the brink of an all-out price war.
Other OPEC members, notably Iran, Libya and Algeria, have been offering large discounts and undercutting the official $34 benchmark price for a 42-gallon barrel of Saudi light crude.
Yamani, in an interview with the Kuwaiti news agency today, warned Nigeria and other price-cutting OPEC members that the Arab gulf producers "shall interfere with all our weight to guarantee that others have to think twice before entering into a price war with us."
"We will not enter a war of prices, but we will interfere to stop a price war between oil countries," he said. "It is in the interest of Nigeria and all oil-producing countries not to start a war of prices."
In indicating that "circumstances" would dictate the size of the price cut by gulf Arab producers, Yamani seemed to be offering Nigeria another chance to reconsider its policy of undercutting the OPEC benchmark price and threatening to go even lower if necessary.
The new Nigerian price of $30 a barrel has put pressure on the gulf producers to reduce the new OPEC base price for Saudi-light grade of crude to $28.50 in order to maintain the existing $1.50 differential between the two qualities of oil.
Nigerian oil, like that of Libya and Algeria, is of a higher quality than the Saudi light crude and the gulf Arab exporters have been seeking to get the African OPEC members to accept a differential of as much as $3 to keep gulf crude competitive.
The combined oil production of the gulf Arab exporters has dropped from about 17 million barrels a day to around 6.5 million during the past two years as the worldwide demand for petroleum has steadily shrunk and other non-OPEC producers have seized a larger market share.
Saudi Arabia, the leading exporter and long the swing producer within OPEC, has reduced its production from more than 10 million barrels two years ago to fewer than 4 million barrels this month.
Part of the massive Saudi drop has been to defend the $34 benchmark price as Iran, another OPEC member and sworn political enemy of the kingdom, has increased its production more than threefold to 3.2 million barrels daily.
Iran has not been participating in the Riyadh meeting, but both it and Libya have been pressing for another OPEC emergency session to halt what they agree could be a disastrous slide in oil prices, and thus in their already depleted earnings.
Heretofore, the gulf Arab producers were resisting such a meeting because of the failure of the last two, in December and late January, to agree on production quotas or price differentials.