Saudi pressure to cut oil prices may cost OPEC unity
A series of oil price reductions by members of the Organization of Petroleum Exporting Countries (OPEC) appears to underline Saudi Arabia's successful campaign to enforce its will on this producers' cartel.
But Saudi Arabia is facing increasing opposition from more radical Arab forces to its closely connected attempts to sway United States policy in a direction more favorable to the Palestinians.
Oil analysts say now that Nigeria has cut oil prices by 10 percent, Algeria will have little other choice than to follow suit. This, in turn, is expected to affect the smaller Gulf states, particularly Kuwait and Qatar.
Kuwait is finding it increasingly difficult to interest clients in its oil -- now prices at $35.50 plus a premium of approximately $6. Kuwait -- with a production ceiling of 1.25 million barrels a day -- already had to reduce its oil production to 800,000 barrels per day because of the glut on the international oil market. A fire in the Shuaibah refinery earlier this month has reduced production further -- to 550,000 barrels per day.
Kuwaiti oil officials have not given up attempts to mediate in the conflict within OPEC. Speaking to reporters Aug. 30, Abdul Rahman al-Awadi, Kuwaiti minister of public health and acting minister for Cabinet affairs, said that Kuwait will continue to attempt to reconcile differences among OPEC members.
But privately, Kuwaiti officials strongly defend Saudi oil policy. "Saudi Arabia did everything it could to achieve an agreement," one official said, pointing to Saudi offers to raise its base rate to $34 a barrel and the Sept. 1 Saudi 10 percent cut in oil production to about 9.3 million barrels per day.
Both diplomats and oil analysts argue that Saudi Arabia's attitude toward OPEC is closely intertwined with the eight-point Middle East peace plan recently announced by Crown Prince Fahd. But Kuwaiti officials express fears that "Saudi Arabia is gambling like President Sadat of Egypt did."
Officials say that the announcement of Prince Fahd's peace plan and Saudi Arabia's OPEC policy has created enormous Saudi and Arab expectations -- expectation that Saudi Arabia's rulers cannot guarantee will be fulfilled by the U.S. "A prominent Saudi recently commented on his country's policy by saying, 'They are selling my mother,'" said a high official of a Middle Eastern country not particularly warm toward Saudi Arabia.
Kuwaiti officials feel the Saudis desperately need a significant political gesture from the US "within several months" as a means of justifying their oil policy and their political relationship with the US to their own citizens and to the Arab world.
These officials fear the Saudi leadership will be faced with a wave of terrorist attacks on Saudi oil installations as a means of retaliation for what will be perceived as "a sellout to the US by the Saudi leadership."
A pro-Libyan weekly in Kuwait reported this weekend that Libyan leader Muammar Qaddafi's two-hour stopover last week in Kuwait was an opportunity to convey a warning to Saudi Arabia. Colonel Qaddafi, the weekly said, wished to inform Saudi Arabia "that if it continued to play the rold assigned to it, it would confront stepst by the forces of liberation in the region."
A Kuwaiti offer to mediate between Libya and Saudi Arabia was rejected by Qaddafi. The Libyan leader perceives the conflict not as one between Libya and Saudi Arabia but between Saudi Arabia and the Arab nations.
Qaddafi's whistle-stop tour of the Gulf followed the signing of a political, economic, and military friendship treaty in Aden with South Yemen and Ethiopia -- both close allies of the Soviet Union.
Observers see the treaty as a direct rev sponse to the formation of the Gulf Cooperation Council -- consisting of Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain, Qatar, and Oman and modeled after the European Community.