OPEC Prepares for Emergency Meeting

Saudi Arabia’s oil minister, Ahmed Zaki Yamani, said Sunday that an OPEC committee had made progress toward a solution to the cartel’s price disarray, but other officials were less optimistic.

Yamani is chairman of the seven-member panel that met for 4 1/2 hours to prepare recommendations for an emergency meeting today of all 13 nations in the Organization of Petroleum Exporting Countries.

Committee sources said after the meeting ended late Sunday that a majority of the ministers had agreed that OPEC’s base price of $29 a barrel was at least $2.50 dollars too high. The sources, speaking on condition that they not be identified, said, however, they did not know if any specific price cut would be recommended.

Ministers leaving the meeting declined to specify what form of action had been agreed upon.

The cartel is trying to prevent prices from collapsing under the pressure of weak oil demands and increasing competition from Britain and other non-OPEC exporters.

During a break in the closed-door talks at a Geneva hotel, Yamani told reporters: “We are discussing everything” that might be done to restore unity and discipline to OPEC’s price structure. He added that progress was being made, but he declined to say what was being considered.

Tam David-West, the Nigerian oil minister, echoed Yamani’s optimism about finding a solution soon. “Everything is going very well, very well,” he said. However, officials from other delegations were less optimistic. Mana Saeed Oteiba, oil minister of the United Arab Emirates, said it would be “very difficult” for OPEC to agree this week on an effective realignment of prices. His pessimism was echoed by other ministers, who spoke on condition they not be identified.

On Saturday, officials said a separate OPEC panel agreed to recommend to today’s meeting that the cartel maintain its benchmark price of $29 a barrel for Arabian Light crude oil and stick to its production ceiling of 16 million barrels a day.

Price Realignment

Yamani’s committee was charged with deciding how OPEC could realign the prices of its dozens of different grades of oil. A realignment might not include a change in the base price of $29, but it would seek to restore balance to a badly disjointed pricing system.

A senior member of one delegation, who spoke on condition he not be identified, said he saw little chance of OPEC agreeing to a logical and effective realignment of its prices unless Saudi Arabia unexpectedly dropped its opposition to raising the price of its lower-quality oils. That could be an alternative to cutting the price of the higher-quality crudes, which include Saudi Light.

Yamani has been quoted in recent days as saying his country would not accept an increase in the price of its Arab Heavy crude because it would mean an unjustified loss of sales for his oil-rich kingdom. Many of Saudi Arabia’s partners in OPEC believe the price of the lower-quality crudes must be raised to reflect growing demand for that grade of oil.

Last month, at its regular year-end meeting, OPEC announced an agreement to raise the price of those heavy oils by 50 cents a barrel, medium grades by 25 cents and cut extra light oils by 25 cents. But Nigeria and Algeria rejected the deal, saying the price for heavy oil must be raised by a bigger amount.

In another development, OPEC officials, angered by a report in the Wall Street Journal, refused to grant security clearance Sunday to a reporter for that newspaper to cover a committee meeting.

Youssef M. Ibrahim, who regularly covers OPEC meetings for the Journal, said he was told by James Audu, an OPEC secretariat official, that his security pass had been “temporarily suspended” pending review by the ministers. A decision on whether to permanently ban Ibrahim from OPEC conferences was to be made later, officials said.

Several OPEC officials said they objected to a story published in the Journal last Friday in which Ibrahim wrote of a “game of oneupmanship” among ministers spending lavishly on limousines and other perquisites at a time when the cartel is nervously watching its oil income shrink.

Tam David-West, the Nigerian oil minister, called it “journalistic hyperbole.” Ibrahim said he stood behind the accuracy of “every word” of the story.