OPEC plans to restore order to its oil pricing arrangements, ending the chaotic free-for-all of the past 18 months, oil industry sources said here Monday. An agreement on moderate, quarterly price rises, partly indexed to inflation, could well emerge from the Baghdad summit meeting of the 13-member Organization of Petroleum Exporting Countries in November.
A formula involving a floor price for crude oil has been promoted by Saudi Arabia, which says this would benefit both producers and consumers. Unruly price leapfrogging since early 1979 has lifted the average price of OPEC crude by 150 percent and scattered rates over a range from Saudi Arabia's $28 a barrel to the $37 charged by some African producers.
A prevailing glut of oil, causing a collapse of free spot market prices, means that OPEC price hawks like Algeria and Iran have nothing to gain from a continued free-for-all. In return for its agreement on the new formula, Saudi Arabia may likely raise its pirce to a $32 marker ceiling and cut production from 9.5 to 8.5 million barrels per day to help stem the glut and stabilize the price at a level acceptable to the OPEC majority.
Major decisions are likely to made in mid-September, when OPEC ministers meet in Geneva, in November at Baghdad, and in December, when ministers will meet in Bali, Indonesia.