Iran-Iraq Feud on Oil Quotas Stymies OPEC : Lower Prices Feared if There Is No Compromise
Committee members of the Organization of Petroleum Exporting Countries failed to achieve a breakthrough on oil pricing Sunday on the eve of a full-scale meeting here.
OPEC President Rilwanu Lukman, asked if any agreement had been reached between Iraq and Iran on oil production quotas, said, “We have to see how it goes.”
As to a breakthrough, he added, “It depends what you mean by breakthrough.”
And asked whether four days of pricing committee meetings had been positive or negative, Lukman, who is the Nigerian oil minister, answered, “It depends on how you look at it.”
The equivocal response was read by oil analysts here as indicating that no compromise had been reached either on getting Iraq to abide by its OPEC quota, or persuading Iran to allow the Iraqi quota to be raised.
In this situation, the prospect seemed to be for even lower oil prices, petroleum experts here said.
A group of American legislators from oil-producing states called on OPEC Sunday to come to some agreement at the general meeting beginning today.
$10 a Barrel
“We need stable prices,” said Bill K. Brewster, Oklahoma state representative and current chairman of the Southwest Energy Council. “We are more interested in stability than the actual price.
“Of course we would rather see oil at $15 a barrel or more--rather than $10. But the main thing is to establish a stable price so that we can plan our state budgets.”
Recently, because of production above OPEC quotas, the price of the benchmark Dubai crude has dropped to $10 a barrel, with prices a couple of dollars higher for North Sea crude and West Texas Intermediate oil.
The negative reading here was reinforced by Lukman’s statement late Sunday that Nigerian President Ibrahim Babangida has sent a special envoy to Iran and Iraq.
Lukman declined to reveal the contents of the envoy’s note--involving oil pricing--addressed to the Iranian and Iraqi leaders but, asked if it might have any effect on the Vienna talks, said, “I hope it does.”
All 13 members of OPEC will meet at the organization’s headquarters here this morning to determine whether they can reimpose production quotas on OPEC members.
At the heart of the dispute is the insistence of Iraq that its quota should be equal to that of Iran, its antagonist in the 8-year Gulf War. Iraq’s quota is about 1.5 million barrels a day, while Iran’s is 2.4 million.
Both nations are pumping far more than their quotas, industry sources say, and that has triggered a similar response from other OPEC producers, leading to a surplus of oil and a fall in price. The solution, as one official here put it, “Is to get Iraq back into the quota system.”
Lower oil prices have adversely affected the economies of members of OPEC. But the depressed price has also severely hurt the economies of such U.S. oil-producing states as Texas, Alaska, Louisiana, and Oklahoma.
