Iran today rejected proposals for any cut in official oil prices despite appeals for compromise from its partners in the Organization of Petroleum Exporting Countries.
An "informal" meeting of all 13 members of the organization was abruptly postponed today after Iranian Oil Minister Mohammed Gharazi said he would "never" agree to a price reduction. The meeting had been convened after extensive consultations to consider a new pricing and production structure.
The meeting, at the Intercontinental Hotel, was rescheduled for Tuesday. Despite Iran's public intransigence and other difficulties, OPEC sources said a deal may yet emerge in the next few days because the alternative is a collapse in the oil market.
Beginning late last week and through the weekend, under the guise of "informal" gatherings, the OPEC majority appeared to be making headway on a new base price for oil of $29 or $30 a barrel--down from $34--and a production ceiling of 17.5 million barrels per day, a million barrels under the present ceiling. OPEC recently has been producing less than 14 million barrels a day, partly because buyers are waiting for prices to come down.
One of the major obstacles seemed to be resolved yesterday with a concession by the Arab Persian Gulf states, accepting a smaller price differential between their oil and the traditionally higher priced African product. This would affect Nigeria, in particular, and the Nigerians have not yet said that the new differential of $1.50 would be acceptable.
In any case, without a broader agreement, individual elements of any accord are unlikely to stand up. Even with a full accord, it would be some time before the full effect of a new pricing and production structure is felt.
"It's going to take more than an announcement that they've agreed to convince the market that OPEC members will abide by their pledges," one oil industry analyst said.
As a glut in world oil supplies developed during the past year, Iran, among others, has consistently undercut announced prices and increased its production to crowd competitors, chiefly its political rival Saudi Arabia.
In an effort to preserve the advantages of a cartel, OPEC repeatedly has tried and has failed to reach a new arrangement on pricing and production better suited to the current buyers' market. Traders say oil is being sold at as much as $10 below the official marker price of $34 a barrel.
After formal meetings in December and January, OPEC began the round of smaller sessions in various cities in expectation that a consensus would eventually be reached.
The fact that Iran sent a delegation to London is regarded as a sign that it is not as adamant on pricing as its public statements indicate.