Arab Gulf states try to keep oil customers

By , Special to The Christian Science Monitor

The Gulf Arab states are worried about how to protect their oil shipments - but not because the world desperately needs those supplies. These nations simply want to keep their customers.

''The outside world can live without that 1.5 million barrels a day from Kuwait and that worries Kuwaitis,'' a West European oil executive said.

Said a Kuwait Oil Company executive, ''There was a time when the Arabs did something (about oil) and everyone shivered and quivered. . . . No more . . . Those days are gone.''

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It is not yet clear how much the recent assaults on oil tankers in the Persian Gulf have hurt exports from either Iran or other Gulf states and won't be until the ''contract quarter'' ends on June 30, oil executives say. The International Energy Agency in Paris says that world supplies of oil are more than adequate for now.

But, agree Kuwaiti oil executives, Western diplomats, and Far Eastern oil company officials, export levels will decline significantly if the attacks continue for several months or a year.

Far Eastern oil men here say that if the attacks become more serious or frequent, the rise in insurance rates would drive customers away, including themselves. The Far East, especially Japan, depends heavily on Gulf oil.

The possibility of losing customers weighed on the minds of ministers from Saudi Arabia, Kuwait, Oman, the United Arab Emirates, Qatar, and Bahrain - grouped together as the Gulf Cooperation Council (GCC) - who convened in Saudi Arabia this week. On Thursday, the GCC proposed that the United Nations help prevent GCC ships from coming under attack.

Earlier, they announced that their countries would reimburse customers for oil lost in an assault. Bahrain's Minister of Development and Industry Yousef Shirwawi said this move was intended to prevent further rises in war risk insurance that had already made Gulf oil more expensive and thus less competitive on the world market.

Iran is compensating for the extra insurance premiums by giving discounts of

''Kuwait and the others will have to discount if this keeps up because there is cheaper crude to be found elsewhere,'' a Far Eastern petroleum businessman said.

Until the UN proposal was put forth, the reimbursement was the GCC's only concrete measure to protect its sales. Several other possibilities have been discussed in the press but none have been confirmed by officials.

''The measures being contemplated require a political decision,'' said an executive with the Kuwaiti Oil Tanker Company.

One possibiility is for the Saudis to extend their air cover to international waters so they can protect the narrow strip in the middle of the Gulf which is outside the war zones and wide enough to take supertankers.

Another suggestion has been to have Arab oil producers at the southern end of the Gulf produce extra oil for a country like Kuwait to the north, which is situated close to the hostilities. However, the Kuwaiti oil minister Sheikh Ali Khalifa Sabah denies Kuwait would do this.

The extent of GCC cooperation is not that great, partly because of traditional rivalries between members, said the Kuwait Oil Company executive.

''We like to talk a lot about such crises but we don't like making decisions, '' he added.

Oman is reportedly pushing for a pipeline to be built that would give the Gulf's littoral states an outlet to the Arabian Sea which bypasses the Persian Gulf and the Strait of Hormuz. But diplomats say it would take a year to construct even if the political agreement were there.

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