Non-OPEC Oil Nations Seek to Halt Price Skid

Officials of several non-OPEC oil-producing nations met privately here Wednesday to discuss the sharp drop in world oil prices, while OPEC appeared split about whether the cartel should hold emergency talks.

No details of the non-OPEC producers’ talks were released, though a source said the meeting had ended and would not resume. It was not clear whether anything had been resolved.

The talks were called by Egyptian Oil Minister Abdel-Hadi Kandil, who said Tuesday that the purpose was to “find a way to boost the oil market . . . and so stop the market sliding.”

Meanwhile, OPEC members were divided on whether to call an emergency meeting to prop up world prices. Several analysts said the odds were against early cartel talks to consider the oversupply in the market that is weighing on prices.

Oil in Europe has dropped by about $1.70 a barrel over the past two weeks, with Brent crude from the North Sea selling for around $14 a barrel, about $4 lower than the official OPEC price.

U.S. oil prices have also been under pressure. The spot contract on West Texas Intermediate closed at $15.49 a barrel in New York on Wednesday, up 4 cents from Tuesday, but dealers said a glut of oil and discounts offered by OPEC members were depressing prices.

Britain Not Invited

Mario Lopez Espinosa, financial counselor to the Mexican Embassy in London, said officials from China, Malaysia, Angola, Oman, Egypt, Colombia and Mexico were attending what he called a private technical meeting at the embassy.

He did not say whether officials from the Soviet Union, the world’s biggest oil producer, attended.

Norway declined an invitation to attend and Britain, the other major North Sea producer, was not invited.

The non-OPEC officials gathered as oil traders speculated that efforts by the 13-member Organization of Petroleum Exporting Countries to prop up the price of oil could be crumbling.

OPEC’s special pricing committee was considering calling a meeting of its own. Energy Minister Subroto of OPEC member Indonesia said in Jakarta on Wednesday that the cartel would either have to cut production or let prices fall on glutted oil world markets.

Industry analysts said there appeared to be two camps within OPEC on whether to hold a price committee meeting.

Think Its Just Temporary

Some OPEC members, including Algeria, Ecuador and Venezuela, favor a meeting to explore ways of restoring prices to $18, they said. But Indonesia, Saudi Arabia and Nigeria are more cautious, saying there should be a clear idea of what the meeting should do before it is held.

“The Saudis fear a meeting may end without any conclusions and drive the market further down,” one analyst said. “Instead they are drawing up plans for the full ministerial meeting next June.”

“Although the falling oil prices are hurting them, the Saudis feel the market weakness is temporary and prices will pick up again in the next two months if OPEC members stick to their output quotas,” an oil analyst said.

Nigeria was not eager to convene a meeting either, a senior Nigerian Oil Ministry official said Wednesday. “Our attitude is not to encourage a meeting of the committee,” the official, who asked not to be identified, told Reuters in Lagos.

Nigerian Oil Minister Rilwanu Lukman was in touch with other ministers to consider a request by Venezuela to convene a meeting. A definite decision could only be taken after those consultations, the official said. Lukman, president of OPEC, has said nothing publicly about the Venezuelan request.

The price monitoring committee includes Nigeria, Venezuela, Algeria, Saudi Arabia and Indonesia, and is empowered to call an extraordinary meeting of OPEC’s 13 members if necessary.

“Our attitude is that the market should be observed for some time. We should not allow ourselves to be stampeded into a meeting because that will be a sign of weakness,” the Nigerian official said. “We can cause things to happen by meeting, but this will boomerang if we are unable to agree on any measures” to shore prices, he said.

One senior Nigerian official said a decision on whether to convene a meeting would not be taken before next Tuesday.

“The odds are against OPEC holding a price committee meeting,” Geoffrey Pyne, analyst at London stockbrokers Phillips & Drew said, “though the further the price falls the greater the pressure for such a meeting.”

In Tokyo, speculation mounted on whether Saudi Arabia would kick away one of the remaining props to the fragile market by offering price cuts to Japan.

Saudi Arabia, which forged OPEC’s price and output pact in December, 1986, in cooperation with Iran, is selling oil to at least four big U.S. companies at prices linked to lower spot rates, industry sources said. Other Persian Gulf states, including Iran, are also linking prices to the spot market.

Prices in Tokyo dropped on reports that Abu Dhabi had offered discounts, leaving Saudi Arabia as the only Middle East producer demanding official prices.