Politics clouds world oil prices - and keeps many economies on edge

The plight of the 2 million West Africans being forced to leave Nigeria. Whether Mexico can avoid a new economic slump. The outcome of the Gulf war between Iraq and Iran. The timing of the next British general election. The very future of the Organization of Petroleum Exporting Countries.

These are some of the political issues whose outcome largely depends on how far - and how fast - world oil prices fall in coming weeks. Indeed, political issues are playing a significant part in creating and intensifying uncertainty over oil pricing.

In effect, major producers were playing a global cat-and-mouse game at this writing, each watching the other to see who will be the first to bring prices down from spot prices now around $29 a barrel.

For instance, the spotlight has been on Britain's non-OPEC North Sea fields since Saudi Oil Minister Ahmad Zaki Yamani said Jan. 24 that the North Sea price was about to fall $2 to $3 a barrel. (It is currently fixed at $33.50 a barrel.)

But at time of writing, attention had shifted to economically sagging Nigeria. If Nigeria cuts its price to keep its share of the market, its direct competitors - Libya, Algeria, and Britain - might have to follow suit.

[The Soviet Union was reported to have cut its price by $2.15 a barrel to an Italian energy group, but sources say the Soviets vary prices according to individual contracts.]

If a general price-cutting battle breaks out, no one can yet predict what would follow. A number of analysts in the City of London, the largest financial center in the world, see a free fall to below $20 a barrel.

The latest edition of the closely watched Middle East Economic Survey (MEES) indicates Gulf states' willingness to see the OPEC $34 a barrel reference price fall to $30. MEES has in the past reflected Saudi thinking.

Economic pressures and implications of price movements are frequently analyzed. But political pressures are affecting decisions now being hammered out both inside and outside the 13-nation OPEC cartel. In the current situation, politics sometimes runs parallel to economic logic, sometimes counter to it.

Analysts here say the following political pressures are now widely felt:

* In Nigeria, both politics and economics have led to the expulsion of up to 2 million Ghanaian and other West African workers.

The Nigerian economy is in crisis. Foreign exchange is so low that reserves can cover only one month of imports. Debts are high. More jobs are needed for local workers.

Every cent of oil-export revenues is urgently needed, but demand is so low in the world that production was cut by 30 percent in January, according to the Nigerian oil industry. The political as well as the economic temptation in Lagos is to discount heavily.

A private-sector analyst here observes: ''Any Nigerian discounts will be matched by the British - and no amount of discounting can improve the lack of demand.''

An oil industry source agrees: ''A quickly falling price is bad news for Nigeria - and for Mexico as well.''

* In Britain, politics has stepped in to block British Petroleum (BP) from pressing the British National Oil Corporation for lower prices right away.

After the Yamani prediction Jan. 24, Energy Minister Nigel Lawson abandoned the government's usual reticence to become publicly involved in North Sea price setting and emphasized Jan. 25 and 26 that Britain followed the oil market rather than leading it.

So politics and economics are pulling in opposite ways here. BP wants prices down so it can sell more oil around the world. The government wants to avoid criticism among developing nations at the United Nations for being the first producer to set prices sliding. In addition Prime Minister Margaret Thatcher must call an election before the spring of next year, and she wants to avoid a sharp loss of oil tax revenue before then.

The government here rakes off almost 90 percent of all North Sea oil profits in royalty and petroleum taxes, industry experts report. According to a widely quoted estimate, total oil revenues could fall from (STR)10 billion ($16 billion) in 1982 to as little as (STR)2 billion by 1986 if prices fall to $21 a barrel.

The estimates are based on computer runs by an Aberdeen University political economist and are to be published in the March edition of Petroleum Economist. Even if real oil prices rose by 1.5 percent a year by 1986 - which looks hardly likely given current predictions - government income would still fall rapidly, the study argues, because production will go down.

* In Iran, politics is even more important than economics in demanding a boost in oil production to an estimated 3.1 million barrels per day (b.p.d.).

Not only is budget spending for the year starting March 20 increasingly dependent on oil revenues, but also high sales at low prices are a way of undercutting Saudi production and revenues. And Iran is furious that Saudi Arabia, together with Kuwait, Qatar, and the United Arab Emirates, has loaned about $25 billion to Iraq since the start of the Iraq-Iran war 21/2 years ago.

Iranian Oil Minister Muhammad Gharazi has made it clear his aim was to stop the Saudis financing Iraq's war effort.

* Saudi Arabia's tactics are causing intense speculation here. Last year the Saudis tried to protect the $34 a barrel price partly to keep OPEC together as an effective cartel, partly to generate money for internal development, and partly to keep on earning money to loan to Iraq and other allies.

The Saudis, sources say, cannot protect the $34 a barrel reference price any longer by cutting their own production. Output is down to between 4 million and 4.5 million b.p.d. The Saudis need at least that to generate enough associated gas to produce crucial electricity and to desalinate seawater.

* In Mexico and Venezuela politics and economics work together. Both economies, deep in recession and debt, want to produce and sell as much oil as possible. Mexican external debt alone is a whopping $83 billion.

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