Word: opec
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...fight. It would be very hectic," said Sheik Ahmed Zaki Yamani, Saudi Arabia's oil minister. But chaos is exactly what the Organization of Petroleum Exporting Countries produced last week when several members of the group threatened to launch an all-out campaign of slashing prices to boost OPEC's declining share of the world oil market. The pronouncement sent petroleum traders into a temporary selling frenzy. On the futures market in New York City, the January-delivery price of West Texas Intermediate, the U.S. benchmark crude, took a record two-day plunge of $3.51, to $25.23 per bbl. Some...
...frequently murky realm of global oil prices, even the offhand remarks of Saudi Arabian Oil Minister Ahmed Zaki Yamani can create an avalanche of rumor and speculation. Last week the energy industry worldwide was abuzz over Yamani's latest actions. With an OPEC meeting scheduled for Oct. 3 in Vienna, the mercurial minister let it be known that he had entered negotiations that could lead to lower Saudi Arabian crude prices for some customers. The move was seen by many as evidence that prices of the hard-pressed OPEC cartel might be on the verge of cracking. Said John Lichtblau...
...Saudi talks with customers focused on a complex "netback price" arrangement, under which sellers effectively charge the market rate for oil rather than the officially posted price. As a rough rule of thumb, the system could net the Saudis $2 to $2.50 less than the established OPEC price of $28 per bbl. While Middle East oilmen could not confirm last week that the Saudis had signed any such agreements, trade sources elsewhere said that the U.S. oil giants Exxon, Mobil and Texaco would buy some crude under the discount system...
Energy-industry insiders saw the Saudi negotiations as an effort by Riyadh to pressure the rest of OPEC's 13 members into halting the now common practice of selling below official prices and exceeding their production quotas. Said a Japanese oil trader stationed in the gulf region: "First and foremost, this netback scheme is a warning to OPEC and non-OPEC oil producers that they must all take coordinated action or the Saudis will go further." As if in confirmation, Yamani warned that a ruinous price war could develop by next spring unless OPEC members stuck to official quota...
While the Saudis have threatened before to boost output, the kingdom's aim on those occasions was to scare the other twelve OPEC members into restraining their production. Now experts believe that the Saudis could be planning a serious effort to boost their income in order to narrow the country's budget deficit, which for 1983 and 1984 totaled $22 billion...