Saudis force oil issue

Press, 15 October 1986, Page 10

Saudis force oil issue

NZPA-Reuter Geneva Saudi Arabia has demanded a higher oil production quota, sending petroleum prices tumbling as an O.P.E.C. crisis conference enters its ninth day today. An official statement said quotas must be redistributed among members to take account of the “big sacrifices” made by Saudi Arabia, O.P.E.C.’s biggest exporter and most powerful member. A Gulf delegation source said this meant that the Saudis were joining their oil-rich Gulf neighbour, Kuwait, in demanding a higher oil production level.

Oil traders, wary of too much supply and too little demand, quickly cut 70 cents from the cost of a barrel of oil, with the United States benchmark price dropping to 5U514.23 ($2B). “The Saudis are saying to Iran they don’t care if prices fall; they want to solve the quota problem now,” said Mr Vahan Zanoyan, an American oil expert. After months of bitter O.P.E.C. feuding, Iran engineered a two-month interim accord from September 1 which boosted prices by 50 per cent to about SUSI 4 a barrel. Oil ministers of the 13member Organisation of

Petroleum ■ Exporting Countries started talks on October 6, their fifth full conference this year, in an effort to further support fragile prices. Persistent over-produc-tion by O.P.E.C. and a decision in December to pump more oil to fight non-O.P.E.C. producers for a “fair share” of the world market, sent prices crashing from SUS3O dollars a barrel in November to under SUS 9 in July. O.P.E.C. controlled about 45 per cent of the world trade in the 1970’5. But energy conservation in industrial nations and newly-emerging non-

O.P.E.C. producers have cut the cartel’s market to about 30 per cent. The Saudi statement echoed that of the Kuwait Cabinet on Monday which also referred to “sacrifices” and backed demands by its Oil Minister, Ali al-Khalifa al-Sabah, to settle the quota issue now. Saudi Arabia and Kuwait appeared adamant that this meeting must resolve the deeply divisive problem of assigning long-term production limits for each O.P.E.C. member.

Oil analysts estimate that the oil price collapse has cut O.P.E.C. revenues almost in half.