OPEC Weighs, Rejects New Market Plan

The Organization of Petroleum Exporting Countries, in a day of confusion, announced Saturday that it was considering a radical new plan to sell its oil, apparently through a joint marketing organization, but it set aside the idea just a few hours later.

The turnabout reflected the frustrated foundering of OPEC as it desperately tried to hold onto both its customers and its official price at a time when there is too much oil on the world market.

After two full days of meetings, the oil ministers of the 13 OPEC nations were evidently no closer than before to a solution.

‘Immediate Steps’ Sought

Dr. Subroto, the Indonesian minister of energy and the president of OPEC, told journalists that the ministers would meet again today “looking for immediate steps” that would “defend the share of the market of OPEC and defend the official price of the body.”

Earlier in the day, however, Subroto had provoked a good deal of excitement by announcing that the ministers wanted a “new approach” and were therefore “examining and looking at an organization which will control the marketing of our production.”

He refused to elaborate on what the ministers had in mind, but it was widely assumed that he was talking about a central body that would sell OPEC oil to the world.

The 13 OPEC producers now sell oil individually. This makes it difficult for OPEC to police how much oil its members produce and the price at which they sell it. The worldwide oil glut has encouraged widespread cheating by OPEC members, either by producing more than their quotas or by selling their oil below the official price.

This defiance of quotas and prices has made it even more difficult for OPEC to keep its prices and customers. Arab light oil, often regarded as the OPEC standard, has been selling on the free market in the last few days at about $1.30 less than the official OPEC price of $28 a barrel. As a result, many customers are turning away from official OPEC oil unless it is sold at a discount. This lack of demand forced OPEC to cut its production to 14.5 million barrels a day in June, 1.5 million barrels less than its own target.

With these kind of figures in mind, many journalists were waiting expectantly for more details about the new marketing organization. However, after an afternoon session of the ministers, Subroto returned with a different story.

The ministers, he said, felt that the setting up of a new committee to control the market would take some time to put into operation and that they therefore were “looking for immediate steps” instead.

Presumably referring to the widespread price discounting and overproduction by OPEC members, Subroto said that the ministers intend to discuss “the practices taking place that have been weakening the market.” The ministers, he emphasized, now wanted to see “what can be done in the short term.”

However, the problem in seeking short-term solutions is that OPEC is split between populous countries, such as Nigeria, that feel they must sell as much oil as they can as soon as possible and less-populous countries, such as the Arab nations, that feel it is best to maintain the price even if that can only be done by cutting production.