Saudis Fire Yamani as Oil Minister : Key Figure in 1973 Embargo by OPEC Held Post 24 Years

Sheik Ahmed Zaki Yamani, Saudi Arabia’s petroleum minister for more than two decades and a key figure behind the oil embargo of 1973, has been fired, the Saudi government said early today in Riyadh.

In a terse announcement in the Saudi capital, the official Saudi Press Agency reported the removal of Yamani, 56, the most powerful figure in the 13-nation Organization of Petroleum Exporting Countries. The agency, which gave no reason for the ouster, said Yamani is being replaced by Planning Minister Hisam Nazer.

Oil industry sources described Nazer, who was named acting oil minister, as a dramatic departure from Yamani in both style and philosophy. But they said it is unclear whether there will be any dramatic shift in Saudi oil policy, at least in the short term.

‘Change in Personality’

“There really is not going to be very much change in policy. It’s a change in personality,” said Ragaei Mallakh, a University of Colorado economics professor and editor of an energy journal.

U.S. officials said that rumors of Yamani’s removal have persisted for some time, fueled by reports that his standing with the Saudi royal family has fallen. At an OPEC meeting earlier this month, for example, he appeared to be at odds with King Fahd over a proposed permanent system for distributing oil-production quotas, and there had been repeated indications over the last few years that he planned to resign.

Yamani’s 24-year tenure was considered extraordinarily long for a commoner in the kingdom of 11 million. He had overseen OPEC’s ascent as a global power and Saudi Arabia’s rise to rank as t1751457911global economy. While he was oil minister, oil prices rose 1,209%.

Yamani was generally a voice of realism in planning strategy among oil producers. Although he helped mastermind the 1973 embargo that sent prices soaring, he also realized that continued increases in prices of oil and gasoline would inevitably cause Western nations to conserve and develop alternative energy sources, bringing on a glut of oil and a blunting of the oil weapon.

To millions of consumers in countries whose economies were rocked by the back-to-back oil crises of the 1970s, Yamani’s became the face and the voice of the cartel.

However, the royal family has long been known to frown upon countrymen who have sought widespread publicity and, in this regard, U.S. officials and industry analysts believe that the high-profile Yamani has walked a fine line.

“The new minister will be more of a low-profile fellow. He will listen more to what the royal family wants him to do,” said one analyst, who spoke on condition that he not be identified.

Fereidun Fesharaki, head of energy planning for the East-West Center in Honolulu, noted that Nazer, who was the architect of the economic development plans Saudi Arabia made during the oil boom of the 1970s, has often disagreed with Yamani in the past over how much oil the country should be producing.

Although analysts remain divided over what course Nazer might follow, Fesharaki said he is “more conservation minded. He’s more in the camp of those who want lower production and higher prices. . . . For the stability of the market, this is better news.”

A glut in the global supply of oil has sent prices plummeting worldwide, though prices recently have slowly crept upward to between $14 and $17 per 42-gallon barrel. In part, the oversupply is the result of conservation measures by oil-consuming countries.

When OPEC’s financial troubles began several years ago, Saudi Arabia--which is the organization’s wealthiest member and has its largest oil-production capacity--had agreed to act as its “swing producer,” voluntarily reducing its own oil sales so other OPEC members could continue to keep their incomes as high as possible.

Production Down Sharply

Since 1981, when Saudi Arabia’s oil production peaked at about 11 million barrels a day, the nation’s production had fallen sharply to about 2 million barrels a day last year.

But the system never worked well, because non-OPEC oil countries such as Mexico and Britain emerged as major players on the world market. As their financial troubles grew, OPEC’s most financially pressed member countries began openly flouting the organization’s agreements by overproducing and underpricing each other.

Amid this chaos, a frustrated Saudi Arabia finally decided to flood the world market with oil in 1985, hoping that the blow would force its fellow OPEC members into line. But the move instead triggered last year’s dramatic price slide. From a price of $30 a barrel in December, oil fell to less than $10 a barrel by spring.

There were reports that Yamani opposed any action that would make the Saudis responsible for lower oil prices and thus make his nation politically vulnerable in the Arab world.

Royal family members are said to remain sharply divided over whether to reduce the country’s oil sales in hopes that prices would rise.

Yamani’s ouster falls between two key OPEC meetings.

At its Oct. 6-22 meeting, the cartel agreed to continue limiting production on an interim basis through Dec. 31. During that session, Yamani said that the Saudis would demand that a permanent quota distribution be set up.

However, only a day after his remarks, the Saudi government rescinded its demand for such a system and agreed to continue its interim curbs until the next OPEC meeting, scheduled for Dec. 11.

Saudi Arabia has sought to increase its production quota of 4.35 million barrels a day.

The announcement of Yamani’s firing came amid reports that Saudi Arabia was considering a 50-cent-a-barrel discount on its oil. The Saudis denied the report Monday.

Times staff writer Norman Kempster contributed to this story.