Saudi Arabia has big role in oil price talks

Press, Volume CXIV, Issue 33626, 30 August 1974, Page 9

Saudi Arabia has big role in oil price talks

(N.Z.P.A.-Reuter—Copyright) VIENNA, August 29. Saudi Arabia seems ready to play a determining role in discussions on oil-price policy’ starting in Vienna today between experts from the world’s 13 major oilproducing nations. The experts, representing members of the Organisation of Petroleum Exporting Countries (0.P.E.C.), are to prepare recommendations for a meeting of oil Ministers on September 12 when prices will be fixed for the final quarter of 1974.

Pressure has built up within O.P.E.C. for production reductions to counter the threat of a world-wide glut of oil and to maintain current high prices. The only voice opposing reductions within O.P.E.C. has been that of Saudi Arabia, the world’s largest oil producer, which has advocated restraint in oil price increases so as to alleviate the difficulties caused by the economies of developed and developing nations alike by previous rises.

Other O.P.E.C. nations have been concerned That Saudi Arabia might respond to United States pressure to lower prices by raising production, and a group of member States including Kuwait and Venezuela are proposing all-round “production planning” to keep supply tailored to demand and leave oil in the ground if prices look like dropping.

But O.P.E.C. sources in Vienna said that the plan might lose its urgency if Saudi Arabia were to soften its stand. They added that recent signs indicated that Saudi policy might be moving more into harmony with that of other exporting countries, and predicted that a head-on clash over production would be avoided.

“This proposal (for production cuts) is a response to a Saudi Arabian challenge. If the challenge is no longer there, the response is no longer necessary,” one source said.

Oil industry sources in Beirut said yesterday that King Faisal of Saudi Arabia had hinted to the United States that he would reduce his efforts to lower oil prices if Washington did not put more pressure on Israel for a Middle East peace settlement.

The Beirut sources said the warning came in a message delivered to President Ford by the Saudi Minister of State for Foreign Affairs, Mr Omar al-Sakkaf, who is visiting Washington.

Kuwait’s Minister of 'Finance and Oil (Mr AbdelRahman al-Atiqi) said last week that his country had reduced its oil production in August and planned to cut it still further, in the next two months.

Mr Atiqi, speaking in an interview in Kuwait with the Lebanese weekly magazine, “As-Sayyad,” said: “If the question of prices is determined by supply and demand, then we shall reduce the supply of our oil to increase demand for it,” The Kuwaiti minister said that his Government was not prepared to operate as "agents” for oil companies by helping them increase proifits at the expense of Kuwaiti 'production. Another major oil export-

ing country, Venezuela, decided last month to cut production to conserve resources, and Government sources said yesterday prices would go up again in September.

Today’s quarterly meeting of O.P.E.C. experts in Vienna, during which they

were reviewing inflation and currency fluctuations, would probably result in a recommendation for an increase in the posted price of oil, O.P.E.C. sources said. But the ministers, at their September 12 meeting, were thought likely to ignore the iexperts and to opt. instead to

continue their nine-month freeze on prices, or make just a token increase, in deference to Saudi Arabia.

Saudi calls for a price cut have helped to keep posted prices, the basic yardstick for oil costs, at the same levels throughout this year after a fourfold rise in 1973.