Iraq scuttles Saudi bid for oil accord

Press, 18 December 1986, Page 11

Iraq scuttles Saudi bid for oil accord

NZPA-Reuter Geneva Saudi Arabia’s new Oil Minister has joined in the battle at the O.P.E.C. conference to try to force an agreement to cut the group’s output and raise world oil prices. “Saudi Arabia is going to reduce its production. Isn’t that positive?” said Hisham Nazer in his first statement on Saudi oil policy since he arrived in Geneva last • week for O.P.E.C.’s conference, his first since the veteran Oil Minister, Ahmed Zaki Yamani, was fired by King Fahd in October. Ministers spent most of yesterday trying to break a deadlock over Iraq’s insistence on producing as much crude oil as its Gulf war enemy, Iran. The Iraqi Oil Minister, Qassem Ahmed Taqi, said: “We insist on having a quota the same as Iran, not one single barrel less.”

As the Ministers argued, the Iraqi Foreign Minister, Tareq Aziz, paid a surprise vist to Saudi Arabia, where he was expected to meet King Fahd.

Optimistic statements by Ministers about the prospects for an agreement have driven up the free market oil. price since the meeting began last Thursday by almost SUS2 ($4) a barrel to Tuesday’s highs 5U516.45. O.P.E.C. wants to drive

the price up to SUSIB,

But a decision to defer a scheduled Ministerial meeting yesterday squeezed confidence from the market and wiped about 50c off the price of oil for loading in February.

The Algerian Oil Minister, Balkacem Nabi, said O.P.E.C. was united in wanting to reduce the group’s oil production by more than one million barrels a day (bpd) to less than 16 million barrels for all of 1987, but Iraq’s quota was the sticking point. “AH of us are trying to find a solution,” he said. “I believe there are also contacts between Heads of States to try to settle the question.” A senior delegate said O.P.E.C. was working on a compromise solution that would involve an allowance for Iraq of 1.9 million barrels per day. Iraq’s official production quota would be 1.6 million, with the rest coming from Saudi Arabia’s official quota. But the delegate said Iraq had demanded that Saudi Arabia offer it 600,000 barrels — double the amount Riyadh has offered — to bring it into line with Iran’s production quota. Both countries need oil revenues to fund the war.

The delegate said Mr Nazer had rejected the Iraqi demand.