Wishing OPEC success in holding the line on petroleum prices
In the industrial countries, it may not be the popular thing to wish success to the Organization of Petroleum Exporting Countries. But when the ministers of the cartel meet in Vienna next week, many in those rich oil-importing countries, including the United States, will be hoping they hold the price line. Well-wishers include:Skip to next paragraph
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The non-OPEC oil industry.
Producers of coal and natural gas, whose prices are heavily influenced by trends in petroleum prices.
Commercial bankers with loans outstanding to either a domestic oil industry or to such nations as Mexico and Venezuela that are highly dependent on oil exports for the revenue to service their external debts.
The oil industry ``would be panicky at the idea that the cartel couldn't hold together,'' notes Morris Adelman, a Massachusetts Institute of Technology oil economist.
The Iraqi bombing of Iran's Kharg Island terminal last week is not entirely unwelcome in oil circles. Reducing the 1 million to 1.5 million barrels per day leaving that terminal could ease the problem of setting production quotas for OPEC. Ministers could allot the lost Iranian output to Saudi Arabia, which has been complaining about not being able to produce at its quota, or divide it among several members.
Professor Adelman comments: ``If they have any sense, they will let the Saudis pick it up.''
Spot oil prices jumped higher immediately after news that the Iraqi jets had severely damaged Iran's main oil-loading jetty. Petroleum buyers must also consider the prospect that Iran might carry out its threat to attack oil installations in other Middle Eastern countries if its own production capability is impaired.
``The [Iraq-Iran] war has been great fortune for OPEC and non-OPEC producers alike,'' Adelman says.
To John H. Lichtblau, president of the Petroleum Industry Research Foundation, the best resolution of the OPEC meeting would be modest erosion of oil prices -- perhaps $1 to $3 a barrel -- from the present $26 to $27 over the next year or two and then a slow uptrend.
Mr. Lichtblau would not like to see a collapse in the price of crude to, say, $15 a barrel because of the potential for economic turmoil. ``Everybody will agree with that except some foolish columnists . . . who think everything would be great if it collapsed,'' he says.
Lichtblau believes OPEC will be able to prevent oil prices from collapsing, despite the recent move by Saudi Arabia to sell some of its crude at discount prices.
Dr. Rene Ortiz, secretary-general of OPEC from 1978 to 1981 and now an oil consultant, maintains that it is in the interests of both OPEC and non-OPEC countries that OPEC stabilize oil prices. If oil prices fall too much, the resulting decline in oil exploration and development would result in the US and other major consumer countries facing increasing dependence on OPEC producers by the end of this decade, he said in an interview here.
OPEC's problem has been a decline in oil consumption in the major industrial countries of the West and in Japan.
According to the International Energy Agency, second-quarter oil consumption by the 24 nations of the Organization of Economic Cooperation and Development totaled 32.3 million barrels a day, compared with 33.5 million barrels a day in the same quarter of 1984.
Other sources of energy, mainly nuclear power and natural gas, have eaten into oil markets.