Word: opec
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...that the price of oil has begun to stabilize, at least temporarily, some industry analysts expect oilmen to begin replenishing their storage tanks. Energy Expert Lawrence Goldstein of the Petroleum Industry Research Foundation estimates that by autumn the non-Communist world's oil needs from OPEC will reach about 20 million bbl. per day. At present, however, the cartel's producers are pumping less than 17.5 million bbl. out of the ground...
...price of crude also represents an initial success for Saudi Arabia, which for the past two months has directed a high-stakes strategy to firm up the market. Saudi Petroleum Minister Sheik Ahmed Zaki Yamani had feared that a continuation of the yearlong slide in petroleum prices could destroy OPEC. Thus, at the organization's March meeting, he succeeded in winning agreement on an unprecedented package of production cuts of 700,000 bbl. per day, or 3.8% of total OPEC output...
During the past decade, OPEC built up financial holdings worth some $360 billion, but that amount is now likely to decrease. Although oil prices have been dropping in recent months, OPEC members have not sharply cut back on their expensive development programs. As a result, analysts estimate, OPEC will have a deficit this year of between $25 billion and $30 billion...
...like Kuwait and the United Arab Emirates should remain comfortably in surplus, but hard-pressed countries with large populations, such as Nigeria and Indonesia, will have significant deficits. Richard O'Brien, an economist with American Express Bank in London, estimates that this year Nigeria and the other populous OPEC nations will probably have to sell off assets worth some $25 billion and then still have to borrow about $5 billion from banks...
Western moneymen are confident that they will be able to handle the problems of fewer petrodollars and new OPEC borrowing. They point out that the principal and interest due this year on all bonds issued in the European market will come to $24 billion, which dwarfs the amount of OPEC borrowing. Moreover, the $1.5 trillion Euromarket is no longer as dependent upon OPEC money as it once was. While most of its new funds were previously supplied by the oil producers, the market is now so large that it can satisfy most of its new capital needs. Finally, the deep...