7 Non-OPEC Nations Agree to Cut Oil Output : Will Accept 5% Reduction if Cartel Agrees to Match

In a potentially far-reaching step, seven non-OPEC oil exporting nations offered Tuesday to cut their oil exports by 5% for the next two months if the Organization of Petroleum Exporting Countries agrees to match the cutback.

There was no immediate response from OPEC officials. The offer was presented at an unprecedented meeting of the seven nations with a committee of leading OPEC members at the cartel’s headquarters here. Though it was in line with expectations, unanimity among the non-OPEC group had been far from certain.

It was estimated that an agreement with OPEC as proposed by Mexico, Egypt, China and four other independent producing nations would temporarily withhold about 875,000 barrels per day from world markets. That would nearly cancel out the excess supply of OPEC oil on the market, thought to be 1 million barrels per day.

Though the plan faces obstacles within OPEC, Mexico Energy Secretary Fernando Hiriart Balderrama, who announced the offer early today, treated its adoption as almost a foregone conclusion and said it marks “the beginning of a new stage of cooperation between a large number of oil producing countries.”

However, there is mutual skepticism of the intentions of certain producers on each side. There have been scattered pledges by non-OPEC producers to trim production before, with uneven adherence. Likewise, the cartel itself has been plagued by cheating on production quotas for years.

Others Join Offer

The temptation to cheat would grow if, as expected, prices climbed as a result of the export cutback. However, the non-OPEC group voiced its support of achieving OPEC’s ongoing target price of $18 per barrel, a moderate posture that might help win Saudi Arabia over.

The other non-OPEC nations who have joined in the offer are Malaysia, Oman, Colombia and Angola. Without OPEC’s agreement to cut 5%, the cutback in the seven nations’ exports would add up to about 200,000 barrels a day.

OPEC nations export about 13.5 million barrels of their total production of 17.5 million barrels of crude per day. Depending on how the cartel’s exports are defined, OPEC could trim 675,000 barrels.

Among OPEC’s problems in implementing such a plan would be distributing Iraq’s share of the cutback among the rest of the cartel members. Iraq has refused to abide by its production quota, and would presumably remain outside this plan. The non-OPEC group leaves it up to OPEC to decide where the net 5% export cutback would come from.

Opposition to further cutbacks in production within the cartel is expected from Saudi Arabia, Kuwait and the United Arab Emirates. However, analysts said such opponents could decide that the long-term advantages of a broad-based alliance--a goal of the weakened cartel for four years--outweigh the immediate burden of additional cutbacks that would fall disproportionately on the Persian Gulf producers, especially the Saudis.

The non-OPEC plan carries only through June because OPEC’s regularly scheduled June meeting could then set new production quotas for the second half of the year, when demand is forecast to be significantly higher and prices could be stronger.

“One thing at a time,” Mexico’s Hiriart said.

He said the offer was “very well received,” but OPEC officials were closemouthed. Two additional meetings--one with the non-OPEC nations, the other of the cartel’s special committee--were scheduled for today. The committee will then make a recommendation to a full meeting of the 13 cartel member nations Thursday.

Relations Severed

The sessions, marking the first time that OPEC and non-OPEC exporters have formally sought to coordinate their output of oil, took place against a backdrop of international squabbling on several fronts.

Word reached the cartel’s headquarters Tuesday night that Saudi Arabia, OPEC’s largest oil producer, had severed diplomatic relations with Iran, another cartel member with which it is frequently at odds on OPEC strategy as well as more fundamental political and diplomatic concerns. Iran’s OPEC delegates were not due to arrive in Vienna until Thursday’s scheduled meeting.

Iran has supported a production cut, opposing the Saudi position. Asked whether the breaking off of relations would complicate this week’s oil talks, OPEC spokesman James Audu said: “I don’t see why it should. They have mutual interests.”

Separately, Venezuelan Oil Minister Arturo Hernandez Grisanti, who has been spearheading the campaign to persuade the non-OPEC and OPEC sides to cut their production, leveled some criticism at U.S. Energy Secretary John Herrington, who has been voicing the Reagan Administration’s disapproval of any efforts to help OPEC to “manipulate” oil prices.

“This meeting is not against anybody. It is not against the United States of America,” said Grisanti, whose country is one of the largest U.S. suppliers of oil. “This meeting is to try to . . . reach a rational level in the price of oil.”

Grisanti was apparently the first OPEC minister Tuesday to meet with Texas Railroad Commission member Kent Hance, who won an invitation from OPEC to meet with ministers here. Hance’s stated goal is to seek cooperation between OPEC and Texas, which produces 2 million barrels of oil daily. Hance has held out the possibility of Texas cutting its production in support of OPEC, prompting complaints by Herrington that Hance is “being used” by the cartel and is “playing right into their hands.”