OPEC unites in face of gulf crisis

December 16, 1990|By Youssef M. Ibrahim | Youssef M. Ibrahim,New York Times News Service

VIENNA, Austria -- Gathering just months after one of its members invaded another, the Organization of Petroleum Exporting Countries managed last week to hold one of its shortest -- and least quarrelsome -- meetings in its 30-year history.

Behind the show of cooperation, industry experts said, was a painful truth driven home anew by Iraq's invasion of Kuwait in August: OPEC no longer controls the world oil market as it did in its heyday.

The group's diminished role can be seen in oil's wild price gyrations since the invasion in a market fueled by speculators' bets on the prospects for war and peace and often indifferent to OPEC's successful efforts at maintaining world supplies.

Indeed, the Persian Gulf crisis is forcing OPEC to recast its role in the '90s and the next century.

One conclusion already reached by all 13 members, including Irag and Kuwaiti's government-in-exile, is that if OPEC is to survive in a market in which it is no longer the dominant player, it must treat oil as a commodity and not as a political weapon.

That consensus set the tone of the year-end meeting here of the group's oil ministers, which was held with hardly a political ripple. Even representatives of Iraq and Kuwait sat side by side without incident.

By ensuring steady supplies, OPEC has helped to keep prices from rising even higher since the invasion.

"OPEC is not involved in the political aspect of the present crisis," said the group's president, Sadek Boussena, Algeria's oil minister, referring to the Persian Gulf standoff.

"We are all attached to the good health of this organization because we all need it more or less intact in the future," Mr. Boussena said.

"The crisis will be over when the crisis will be over. Meanwhile, what we can do is preserve stability in the market, retain the confidence of consumers and prepare for the difficult period ahead. What I care most about is that consumers stop looking at OPEC as an enemy."

This is all a far cry from the '70s and '80s, when OPEC was perceived as a greedy organization that went out of its way to raise oil prices and reach into the pockets of consumers at the slightest hint of a shortage.

Yesterday's price hawks, which included Algeria, Iran and Libya, are today at the forefront of those in OPEC who advocate moderate prices and complain about speculators in the West who are boosting the price of oil by trading it over computer screens as they do with stocks.

The new OPEC, as Mr. Boussena sees it, is an organization that "seeks a transparent oil market, free of disruptions."

If anything, the gulf crisis has confirmed that notion by making it clear that from now on, no OPEC country will again feel free to produce oil without regard to the interests of other producers, so devastating have been the consequences of the Iraqi invasion.

Nor is it likely, industry experts said, that OPEC will again pursue policies that are detrimental to the world economy, to judge from its actions in the gulf crisis.

OPEC's instant reaction to the shortage of Iraq and Kuwaiti crude was to authorize all its remaining producing members to pump all the oil they could to make up for it.

At last week's meeting, the group reaffirmed this policy and said it would return to a quota system only when the crisis was over.

Even then it would do so slowly to keep prices affordable to consumers, virtually all the ministers present here agreed.

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