Word: crude
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...selling. Last week, however, they seemed almost paralyzed by uncertainty. Only a fortnight ago, the Organization of Petroleum Exporting Countries had failed to reach agreement on a plan to prop up oil prices by curbing production. That dramatic breakdown induced a kind of suspended animation. The cost of crude seemed sure to fall, but no one could be certain how far or how fast. While a few oil producers made their opening moves last week, others held back to see what their competitors would...
...first gambit came from an unexpected source: the Soviet Union. In a new deal with the Italian government, the Soviets reduced the price of their crude by $2.15 per bbl., to $29.35, which was considerably lower than the OPEC benchmark price of $34. The Soviet Union produces more oil than any other country (12 million bbl. per day), and exports of crude account for 80% of its foreign currency earnings. Apparently, Moscow wants to protect its share of the oil market, or even increase sales, through price cutting. But almost no one followed the Soviet lead. Only Egypt, which exports...
...bargaining table an additional demand that remained to be resolved on Monday morning. They would curb production, said Yamani, only if the African states would charge a premium price for their oil that fully reflected its higher-than-average quality. Nigeria, Algeria and Libya produce so-called sweet crude, which yields a particularly desirable mix of products after refining. Moreover, because these countries are relatively close geographically to their European customers, the cost of transporting the crude is lower. For these reasons, the OPEC members have tacitly agreed in the past that African oil should sell for a few dollars...
...recent months, the Africans have not been charging a high enough premium to satisfy the Saudis. At the Geneva meeting, Yamani demanded that the Africans raise their prices in order to keep the Saudis from being noncompetitive when they try to sell their less desirable crude. The Africans balked at boosting prices at a time of sluggish demand, and the meeting disintegrated into a raucous round of name-calling. At one point, Yamani reportedly shouted: "I am a man of the desert, and nobody is going to laugh at my beard." That was the Arab equivalent of saying, "Nobody...
...sharp slide in oil prices could be devastating to Mexico. Every $1 cut in the price of Mexico's crude oil, which now sells at $32.50 per bbl. for the highest grade, would cost the country about $550 million in revenues and make it that much harder to meet the estimated $12 billion in foreign interest payments that are scheduled to become due this year...