OPEC Members Near Accord on Oil Output Cut : All but Iraq, Possibly Iran, Expected to Sign Pact at Late Evening Meeting

OPEC leaders met into the early hours of Saturday to conclude what some delegates predicted would be a formal agreement for at least 11 of the 13 member countries to cut oil production.

Libyan Oil Minister Fawzi Shakshuki told reporters that the expected agreement would exclude Iraq and possibly Iran, although details of the final outcome remained in doubt.

Other delegates, speaking privately as the talks dragged on, said it was a near certainty that the oil ministers would wrap up their conference with an accord and a concluding communique.

“It will exclude everybody who does not want to sign,” Shakshuki said. “At least 11 will sign anyway.”

Shakshuki spoke to reporters as he entered a hotel restaurant after a full day of private meetings that apparently broke a final deadlock in the 9-day-old conference. He said the oil ministers planned to meet later in the evening for a “final” formal session at which the production-cutting accord could be formally adopted.

The proposed production cuts are aimed at boosting oil prices to OPEC’s target of $18 per 42-gallon barrel.

Oil Prices Move Higher

Oil prices rose sharply Thursday after Saudi Arabia and Iran gave up trying to force Iraq to join the cuts, and the trend continued Friday. In late trading on the New York Mercantile Exchange, contracts for January delivery of West Texas Intermediate, the benchmark U.S. crude, stood at $16.18 a barrel, up 12 cents.

Iraq had refused from the Dec. 11 start of the conference to cut its production below the Iranian level, while Iran had insisted that no deal could be done without Iraq’s participation.

On Thursday, Iran dropped its objections to Iraq being excluded. But in a lengthy round of private talks on Friday, Iran raised the possibility that it also would drop out.

The Tehran government earlier had rejected the idea of excluding itself from the production accord because it had staked much of its political clout on putting the agreement together in the first place.

Saudi Arabia and the other conservative governments on the Arabian Peninsula have helped Iraq finance its war against Iran, which now is in its seventh year.

Seeking Unified Pricing System

The OPEC leaders also were working on details of a plan for restoring a unified system of fixed oil prices. The system had been discarded a year ago, when OPEC sought to win a bigger share of the world market. Conference sources said the ministers were likely to put off a final decision on implementing the pricing system until a later meeting, possibly next spring.

OPEC’s most immediate priority is cutting its oil production to dry up the world oil glut and send prices up to $18 a barrel from the current range of about $13 to $16.

The probable effect of such a strategy on retail prices of gasoline and other oil products is difficult to judge because any OPEC production cuts would not necessarily cause a uniform rise in oil prices.

All member countries except Iraq had tentatively agreed Thursday on specific cuts in their oil production starting Jan. 1, according to conference sources.

The proposed agreement would set a production limit for OPEC of 15.8 million barrels a day.