O.P.E.C.’s world

Press, Volume CXV, Issue 33790, 12 March 1975, Page 16

O.P.E.C.’s world

The summit meeting of the Organisation of Petroleum Exporting Countries held in Algiers showed the members' determination that oil prices would maintain their present value but that these countries would co-operate with, rather than confront, the consumers. Oil-producing countries will attend a meeting, likely to be held in Paris on April 7, between consumers and producers of oil to prepare for talks on a fuller scale later. The need for stability of prices in importing countries was recognised and the conference seemed to be opposed to a sudden overthrow of the world economic system by huge increases in the price of oil. Some members suggested that oil-producing countries would help oil consumers to finance their purchases of oil. The Shah of Iran offered the gratuitous advice that Western countries should do something about inflation.

Inflation and the weakness of the American dollar are among the primary concerns of the oil producers wanting to protect the value of their; revenue. The Vienna headquarters of O.P.E.C. is working on a method of indexing inflation, perhaps linking prices of certain commodities and technologies with the price of oil. Kuwait has said that another meeting must discuss the weakness of the American dollar.

The confidence shown by O.P.E.C. comes largely from the unity of the organisation. More extreme positions would undoubtedly be taken if some members of the oil cartel were considering lowering prices drastically. Demand for oil has fallen, partly because of the success of conservation measures and the mildness of the European winter. Oil production has fallen from 31 million barrels a day in mid-1974 to about 26 million barrels daily. These changes have caused some concern among producers, but not sufficient to break the O.P.E.C. price line. While the line holds, the behaviour of the cartel is fairly predictable and the agreements at Algiers may be taken seriously.

The purpose of the summit meeting was to establish an “ O.P.E.C. charter ”. Although the broad outlines of this have become clearer, some details have not. Besides the price relationship with the oil-consuming countries, two other elements became apparent. One is that the O.P.E.C. members are going to champion the cause of the Third World and the developing countries, among which they number themselves; the other is that in O.P.E.C.’s lending policies, in its investments, and in its views on the possibilities of providing cheaper fertiliser for poor countries, the organisation is determined to establish new international economic order. Details of how it intends to fashion the world economic system will be awaited with interest — and some trepidation — throughout the world.