YOU ARE HERE: LAT HomeCollections

OPEC Ministers Appear Closing In on a Strategy : Despite Deadlock, Yamani Reports Progress on Plan to Achieve $16-$19 Range

June 28, 1986|DON A. SCHANCHE | Times Staff Writer

BRIONI, Yugoslavia — The Organization of Petroleum Exporting Countries appeared Friday to be nearing agreement on a temporary strategy that the member nations hope will gradually force up the price of oil to between $16 and $19 a barrel.

"We're making progress on all fronts," Sheik Ahmed Zaki Yamani, the Saudi Arabian oil minister, said after the first of Friday's two negotiating sessions. But the ministers adjourned their second meeting still deadlocked.

A senior member of one delegation, who asked not to be further identified, said the ministers were close to agreement on an interim strategy. He said it would call for holding OPEC production down to the point that it would push prices up in the last quarter of this year--but only as far as the $16-to-$19-a-barrel range, not enough to take the competitive pressure off non-OPEC producers.

This source said that a majority of the ministers favor an OPEC production ceiling of between 17 million and 18 million barrels of crude oil a day, and he said they believe that this would bring about a gradual rise in prices from the present $12 to $15 a barrel. Current OPEC production is estimated at 19 million barrels a day.

The aim, the source said, would be to hold prices in the relatively low range for at least a year, perhaps for as long as three years, in order to maintain the cost-price squeeze on non-OPEC competitors such as Britain and Norway. The goal is to recapture lost markets and to force the non-OPEC producers to cooperate in maintaining future OPEC production and price goals.

If the interim strategy succeeds, he said, an effort will then be made to push prices back up to the $28-a-barrel level.

Uncertainty remained, however, about the position of Iran, Libya and Algeria on the proposed interim strategy. Their refusal to go along with a similar strategy in April defeated a plan to hold OPEC production down to 16.3 million barrels a day.

Algerian Oil Minister Belkacem Nabi emerged from Friday night's meeting in an apparently cheerful mood but told reporters there had been no meeting of minds. He said there was a 50-50 chance that the meeting will break up today without reaching an agreement.

Fawzi Shakshuki, the Libyan representative, also said there was no agreement, but he appeared to show more flexibility than previously. Asked if the three dissidents could accept the $16-to-$19 price level, he replied: "For how long?"

Iran, Libya and Algeria have opposed the gradualist approach that the majority favors and have sought instead to cut production sharply, to about 14 million barrels a day, in order to shock the market into a quicker and steeper price rise.

In addition to those three and Saudi Arabia, OPEC's members are Ecuador, Gabon, Indonesia, Iraq, Kuwait, Nigeria, Qatar, United Arab Emirates and Venezuela.

Los Angeles Times Articles