OPEC Meeting Again Today as Reports of Oil Price Cut Persist

The Organization of Petroleum Exporting Countries, trying to shore up its waning influence over world oil markets, failed again Tuesday to announce agreement on a new price of oil.

But there were persistent reports during the day that the cartel’s ministers had agreed on a price cut, and they had been expected to make an announcement after a night session of their emergency meeting here. However, Subroto, the Indonesian oil minister who is president of OPEC, told reporters that the session had been adjourned until this morning.

One minister said some of his colleagues wanted to obtain the approval of their governments before signing any agreement.

According to the reports, which came from people who attended the sessions, the ministers have tentatively agreed on a new pricing system. The new system might mask a price cut, but analysts estimated that the system would amount to a reduction of $1 a barrel. OPEC’s so-called benchmark price is now $29 a barrel.

The new price would bring OPEC oil to a level just above what similar oil now costs on the open market. That price was $27.65 a barrel on Monday.

Some analysts insist that OPEC cannot regain control of the market until it lowers its price well below that. Moreover, they say, OPEC cannot have any influence on the open market unless it reduces production of oil well below its present 16 million barrels a day.

Losing Some Allies

“Sixteen million is too great a production to maintain a stable price,” Oscar Wyatt, president of Coastal Corp., a Houston-based oil and natural gas company, told reporters in the lobby of the Inter-Continental Hotel here Tuesday.

Meanwhile, there were increasing signs that OPEC, which once had enough power to persuade non-members to follow its pricing lead, is losing some allies. Abdel Hadi Kandil, the oil minister of Egypt, a non-member that has observer status at the cartel’s meetings, walked out of the morning session, telling reporters he doubted that Egypt would continue to cooperate with OPEC.

“The market is stable,” he said. “But what is not stabilizing the markets are these meetings. We are leaving. I told them: ‘Don’t invite me anymore.’ ”

There was great confusion Tuesday over the reports of a new pricing formula. The standard price of $29 a barrel for OPEC oil is actually the price charged for light crude oil from Saudi Arabia. Lighter oil, which is easier to refine, is sold for a higher official price than heavier types, which are thick and thus more difficult to refine.

According to some reports, OPEC intends to stop using light Arabian crude as the oil for which the benchmark price is charged. Some reports indicated that Saudi Arabia, in fact, would stop selling that grade of oil altogether and sell a slightly heavier variety instead for a slightly lower price.

On top of this, the oil ministers here were arguing over the difference in price between the heaviest and lightest grades of OPEC oil. There is now a spread of $4 but, according to some reports, the ministers have agreed to reduce the spread to $2.40.

That might please Nigeria, which sells the cartel’s lightest oil and feels that it is being undercut by the low prices charged for heavy oil from Saudi Arabia and other countries in the Middle East. To compete, Nigeria, in fact, has been charging customers $2.50 a barrel less than the official OPEC price of $30.50 for a barrel of its oil, a move that has created tension and resentment within OPEC.