'Fear, not demand, is driving up oil price'

Press, 26 December 1979, Page 6

'Fear, not demand, is driving up oil price'

LNZPA-Reuter New York Fear rather than demand is forcing up the price of oil, the Saudi Arabian Oil Minister (Sheikh Ahmed Zaki Yamani) has said in an American television interview. Asked on a C.B.S. News! programme why oil prices keep rising while at the same time production is exceeding consumption by more than one million barrels of oil a day, the Saudi Minister replied: “Well, why because there is a psychological factor involved, the fear that something might happen in Iran.! which will cause another; sharp decrease in the supply! of oil. “And, therefore, the oil:

companies and certain nations, they buy ihe oil and they stock it, at a very high price. It is the fear more than anything else." Sheikh Yamani. who was interviewed in Venezuela on Friday at the end of a meetling of the Organisation of [Petroleum Exporting CounI tries, predicted there could Ibe a glut of oil on the world market possibly in 1980 before the end of March. Sheikh Yamani said it was very clear to him that prices would then go down. The Saudi Minister defended his country's decision to raise its oil prices by SUS 6 a barrel, to SUS 24, saying oil companies were making large profits from cheap Saudi crude.