‘Oil price rise justified’

Press, Volume CXIV, Issue 33628, 2 September 1974, Page 13

‘Oil price rise justified’

(N.Z.P.A.-Reuter—Copyright) VIENNA, September 1. Economic experts from the world’s largest oil-exporting countries have agreed that a price increase is justified for the final quarter of the year, according to reliable sources in Vienna.

The experts, who make up the economic commission of the Organisation of Petroleum Exporting Countries, are preparing detailed proposals to put to a regular deci-sion-making meeting of O.P.E.C. Ministers on September 12. Sources close to the commission’s meeting, which began at the organisation’s Vienna headquarters on Thursday, say that the size of the recommended increase is “along the same lines as before.”

The previous economic commission meeting, in June, recommended an increase in the posted price — the yardstick for calculating oil prices — from $U511.65 to SUS 12.67 a barrel; but the Ministerial meeting which followed, in Quito two weeks later, kept the posted price as it was, and made only a token increase by raising the less-significant

royalty payments by 2 per cent.

After fourfold increases in the posted price in the last quarter of 1973, the Ministers have frozen the price at their quarterly meetings in spite of recommendations for an increase by the commission, which bases its proposals solely on economic considerations, whereas the Ministers are also swayed by political factors.

The Ministers agreed to freeze the price mainly to compromise economic arguments for a rise with a demand from Saudi Arabia, the world’s largest exporter, that the price should be reduced. The Vienna sources say that Saudi Arabia is not advocating a price reduction at the commission’s meeting, but simply urging that prices be kept the same; but they add that this does not mean that the Saudi Arabian Oil Minister (Sheikh Ahmed Zaki Yamani) will not repeat his demand for a lower price at the Ministerial meeting.