Britain edges along OPEC oil tightrope to avoid price tumble
London — The latest move in the saga of world oil prices - a delicate, complex price cut by Britain - is described here as an ''ingenious effort'' to keep prices from tumbling.
But a number of analysts and economists in Western Europe still see a drift down to cheaper oil over the next six months.
They give three reasons: The 13 members of the Organization of Petroleum Exporting Countries (OPEC) face slack demand in a world awash with surplus oil; demand may stay low as oil companies use inventory oil while they wait for even lower prices; and spot prices might drop even further by fall.
Britain's latest move, awaited with intense interest by the oil world, affirms its status as one of the noncommunist world's major, non-OPEC oil producers.
Cleverly, the British National Oil Corporation (BNOC) has offered its customers several levels of lower prices for various grades of North Sea oil. BNOC has two objectives in mind, analysts agree:
* To compete more intensely with Nigerian crude oil for the lucrative United States market.
* To juggle prices so that OPEC-member Nigeria will not be tempted to undercut North Sea oil again and trigger a potential price war.
BNOC lowered its price by $3 a barrel in February, to $30.50. Nigeria at once undercut the price for North Sea oil by an unexpected margin of 50 cents, dropping $5 a barrel to make its price for high-grade ''Bonny'' light crude $30 a barrel.
Nigeria, in economic crisis and depending on oil for 90 percent of government revenues, also vowed to match any further British cuts. OPEC, whose benchmark price then was $34 a barrel, was thrown into disarray, and finally lowered its own price to $29 a barrel March 14 after marathon meetings here.
The Saudi oil minister, Sheikh Ahmad Zaki Yamani, made it clear the British could drop to $30 a barrel without upsetting Nigeria, whose aim is to push production back from around 500,000 barrels per day (b.p.d.) to around 1.3 million b.p.d.
After long deliberation, the British have moved with what analysts see as unusual subtlety. BNOC has turned oil in the Brent Field pipeline into its ''marker,'' or reference crude, and has fixed it at $30 a barrel, the same as Nigeria. Brent crude, the highest-grade British crude oil, is comparable to Nigeria's Bonny Light.
But, because demand is low and competition high, it has also fixed other North Sea grades - from the Forties Field, and from the lower-grade (more sulphur, more wax) Ninian, Beatrice, and Flotta Fields at prices ranging down to
The general feeling in London Thursday was that Nigeria would not react and that prices could remain stable for a short time at least. Shell Oil Company, which wants a larger differential between its own Brent Field crude and others, would be hurt somewhat.
Tony Parisi, London bureau chief of Petroleum Intelligence Weekly in New York , said in an interview: ''The British move is an ingenious one, and I do give it a chance of working. It's clearly a delicate balance and a compromise. In the longer run, pressure will remain on OPEC unless demand revives.''
Observed Carol Ferguson, a partner in the stockbroker and oil specialist firm , Wood MacKenzie & Co., by telephone from Edinburgh, ''There are ingredients for face-saving for everyone here. I am reasonably optimistic that the BNOC move will hold.''
''There are grounds for making Brent the marker crude for the North Sea,'' she continued. ''The spot markets now put Brent about 25 cents a barrel above the Forties Field.''
OPEC will face a difficult three months as demand stays low. The overall quota it agreed on in London - 17.5 million b.p.d. - was about 400,000 b.p.d. too high. But Iraq could not fill 400,000 b.p.d. of its own quota of 1.2 million b.p.d. because of its war with Iran.
''The Saudis can add that to their own quota, since the Saudis are acting as the OPEC swing producer to keep production down. So I think OPEC might manage to make its own decisions work as well,'' she said.
According to a BNOC spokesman, the Brent Field produces about 700,000 b.p.d., Forties Field about 450,000, the Ninian Field about 325,000, and the others produce lesser amounts.
''We hope our latest offer will bring stability to the markets,'' he said.
In Paris, a Western government source in daily touch with oil price moves said, ''BNOC has been pretty ingenious. I think this has a good chance of satisfying the Nigerians.''
A City of London analyst was more pessimistic. ''Demand is too low for OPEC to hold the line,'' he said. ''Some OPEC members will cheat on the quotas, produce too much, and prices will fall some more.''
(BNOC customers continue to put pressure on BNOC for further cuts in price to come more in line with spot market prices. United Press International reports that North Sea crude was selling at $28 a barrel on the spot market Thursday, $2 below the new official price.)m
Both Shell and British Petroleum were expected to accept the BNOC offer by the deadline of April 8. Meanwhile the pound sterling firmed slightly Thursday. The Thatcher government believes its fall in recent months will offset lower North Sea oil prices, since the prices are denominated in strong dollars, which buy more and more pounds these days.