As OPEC oil ministers continued to argue over a formula for lower oil prices, there were fresh signs today that other oil producing states were prepared to abandon their tacit cooperation with the cartel in managing the world oil market.
Egypt's oil minister Abdelhadi Kandil, who was attending OPEC's emergency meeting as an observer, angrily left for home today hinting he will unilaterally cut prices of his country's oil exports. Egypt produces 870,000 barrels a day, with nearly half a million being sold abroad.
"I told them not to invite me any more," Kandil said. "These meetings are destabilizing the market. I doubt that I will cooperate with OPEC any more."
Even if OPEC surmounts its present troubles, another major challenge to the 13-member cartel may occur soon if other non-OPEC producers emulate Egypt's threats to pursue more independent policies.
OPEC's share of the world oil market has steadily fallen from two-thirds to about one-third in the past five years, as nonmembers such as the Soviet Union, Britain, Mexico, Malaysia and Egypt have substantially expanded their production capacity.
OPEC, meanwhile, has been forced to roll back its output to a self-imposed ceiling of 16 million barrels a day in a vain attempt to stem the erosion of high prices resulting from a world oil surplus.
Kandil expressed exasperation with OPEC's incessant quibbling over minor differences between light and heavy oils when the real problem, he suggested, was the need to bend to the market's call for a sizable price cut.
"Their way is different from mine," Kandil said. "I represent producers and consumers together. All our customers are happy to work with us."
OPEC ministers adjourned their meeting late tonight without reaching agreement on how to narrow the $4 price gap between light and cheaper heavy oils. They plan to resume their efforts to thrash out a new price structure, which could see the official $29 benchmark fall by a dollar or so, Wednesday morning.
Oil industry officials questioned whether a token price decrease could be sufficient to stimulate a rush of new buying and erase expectations of a bigger price cut.
"Sixteen million barrels is too high a level to maintain stable prices now," said Oscar Wyatt, chairman of Coastal Oil Co., one of the biggest refining firms in the United States. "OPEC needs to cut production further, and any little agreement on light and heavy oils will not mean anything until they do."
By March, oil analysts speculated, OPEC may confront the need to support any new price structure with a further slash in its production quotas, especially if Mexico and the Soviet Union undercut the cartel by raising output or cutting prices a bit more.
Last month Mexico warned it would soon go its own way if OPEC did not put its house in order by halting widespread cheating through price discounts and excess production.