OPEC oil ministers failed to agree on a new range of reduced oil prices today as renewed feuding broke out over who is responsible within the cartel for offering secret price discounts that undercut official rates.
The 13 representatives of the Organization of Petroleum Exporting Countries bickered for nearly three hours tonight over the rampant cheating that has eroded the cartel's attempts to maintain a united front on price and production levels, according to ministers and delegates who attended the acrimonious session.
The refusal of some OPEC members to open their books led to charges that they were attempting to cover up oil sales and production figures that undercut the cartel's fixed rates. Such cheating is said by oil traders to be so widespread that 80 percent of all OPEC oil is being sold below official prices.
The row interrupted efforts by Saudi Arabia and Kuwait to persuade the cartel to agree to cut prices for heavy crude, which is produced in large quantities by the two Persian Gulf sheikdoms.
The Saudi proposal is also backed by Venezuela, which has indicated it will proceed to lower prices on its own unless the conference can reach agreement here. Non-OPEC Mexico, which pursues the same customers as Venezuela, recently announced substantial price reductions, and Venezuela has come under pressure to follow suit.
"I have the impression that a compromise will emerge that will accommodate OPEC's price structure to market conditions," said Venezuela's oil minister, Arturo Hernandez Grisanti.
Saudi sources indicated they would accept a token cut of perhaps 50 cents a barrel for heavy crude, which would still leave the OPEC price about $1 higher than the free market.
Light-oil producers, such as Algeria, Libya and Nigeria, have resisted all proposed cuts to link OPEC prices more with the free market, fearing that such moves will create even more downward psychological pressures on world oil prices. They also worry that any widening of the price gap between the different grades will chase customers away from their more expensive light grades of oil.
The contentious issues of price cuts and cheating have compelled the 13 ministers to drop any discussion of new output quotas from their agenda Monday. But the debate over production is expected to flare up again at their next meeting, to be held possibly as early as September.
At that time, OPEC could face another troublesome conflict over Iraq's intention to raise its production by 500,000 barrels a day once a new pipeline link across Saudi Arabia to the Red Sea port of Yanbu begins pumping that amount of oil in the autumn.
Baghdad has been forced to find outlets for its oil through Turkey, Jordan and Saudi Arabia because the port of Basra, at the northern tip of the Persian Gulf, has been shut down since the war with Iran broke out in September 1980.
In recent months, Iraq has produced well below its quota of 1.2 million barrels a day and insists that it is owed the increase to 1.7 million barrels a day to continue paying for its costly five-year war with Iran as well as its ambitious development projects.
Besides angry opposition from enemy Iran, Iraq's demands are being resisted by other gulf producers because such an upsurge of new production would exacerbate the existing global oil glut and drive down prices even further.
If Iraq proceeds to pump in excess of its fixed quota, many other OPEC members are expected to claim equally pressing reasons to raise their output unilaterally. Even the richest producers, Saudi Arabia, Kuwait and the United Arab Emirates, contend that they have reached the limits of their output restraints and must be allowed to pump more oil.