O.P.E.C. divided on oil-price policy

Press, 10 May 1980, Page 1

O.P.E.C. divided on oil-price policy

NZPA-Reuter Taif, Saudi Arabia Members of the Organisation of Petroleum Exporting Countries have ended their first round of negotiations on .strategy for the 1980 s without agreement on how fast prices should rise. . Three militant producers, Iran. Algeria, and Libya, refused to go along with the majority of the 13 members in approving a policy which would see prices increased quarterly’ according to a formula accounting for inflation, growth rates in industrialised countries, and international currency fluctuations. Saudi Arabia’s Oil Minister (Sheikh Ahmed Zaki Yamani) said at the end of the two day strategy conference that the formula would ensure predictability of price and supplies for consumers. It would also obviate oil-

market upheavals such as the one which came after last year’s Iranian revolution. The three dissenting States argued that the formula would not increase prices adequately and appeared to . bow to the needs of Western consumers. But the Iranian Oil Minister (Ali Akbar Moinfar), considered by delegates to be the most militant of the 12 Ministers at the talks, said, the differences were not unbridgeable. Nigeria was absent. Sheikh Yamani made a scathing attack on the three States, saying that he thought they would accept a formula which would give them higher prices irrespective of what it was linked to. But he joined the O.P.E.C. president. Dr Humberto Calderon Bertie, the Venezuelan Oil Minister, in denying

that the differences amounted to a new O.PiE.C. split. Dr Calderon said he believed the three dissenting States would’ accept the pricing proposals once O.P.E.C- returned -to; a single base price for ' its crude oil. An agreement could not be -implemented

without a unified O.P.E.C. price, which was abandoned in the scramble for higher prices after the shortages caused by the revolution in Iran. Dr Calderon said he , hoped that the O.P.E.C. would return to a single base price as soon as possible. But Sheikh Yamani said hopes had faded that this would be achieved at the ’ next regular O.P.E.C. price conference in Algiers next month because of rising prices on the oil spot markets caused by fears of further supply shortages after the United States attempt to rescue its embassy hostages in Teheran last month. Events in Iran had delayed the emergence of a significant surplus in the world oil market.’ but a sizeable surnlus was imminent if high oil prices were maintained. >• Sheikh Yamani strongly

supported an O.P.E.C. statement which said that the oil exporters would not make up the shortfall in supplies from Iran. Mr Moinfar said that Iran’s exports, which averaged more than five million barrels a day under 'the former (Shah, had fallen to below one million barrels a day. In Tokyo, industrial sources said yesterday that the Japanese Government had made a concession in its oil-price dispute with Iran by deciding to allow oil importers to pay the SUS3S a barrel demanded by Iran for oil shipments in April. The National Iranian Oil Company suspended all light crude shipments •to Japan bn April 21 after the Japanese companies, on the advice of the Government, had refused to accept an increase of 82.50 a barrel; raising the price to 835.

In Wellington, an oil company spokesman said that oil companies were being forced to pay “fancy prices” for crude oil. These prices would be passed oh to the consumer. Crude-oil prices had risen from 512.50 a barrel early last year to $26 by the end of the year. The companies now -.aid up to S3B a barrel on the spot market. The companies had also been affected badly by the oil producers’ reduction in their credit from 60 days to 30 days. In Tripoli, the Libyan leader, Colonel Muamar Gadaffi. said yesterday that Libya was seriously considering halting oil supplies to Britain and the United States, according to the Libyan News Agency.