Page 399 - Arabia the Gulf and the West

396 Arabia, the Gulf and the West

discussions. It was also to be the last occasion on which the companies were to
go through the motions of negotiating oil prices with OPEC. Henceforth, as
Yamani had predicted two months earlier, prices would be laid down’hv
OPEC alone. y

The day before the talks collapsed the government of Kuwait had called for
an urgent conference of the Arab oil-producing states to discuss ‘the role of oil’
in the war now raging. At their last meeting Yamani warned Piercy that

ARAMCO could expect, at the least, to be ordered to cut back its production
from 8.3 million b/d to 7 million b/d. The warning caused consternation in the
boardrooms of ARAMCO’s four parent companies, and on 12 October their
chairmen - J. K. Jamieson of Esso, Rawleigh Warner of Mobil, M. F.
Granville of Texaco and Otto N. Miller of SOCAL — sent a joint memorandum
to President Nixon expressing their alarm at the dangerous situation they saw
developing. It was a unique occasion in the oil world, in that it was the first time

that the chairmen of the four major American international companies had put
their signatures to a joint message. They expressed their alarm at two develop­
ments in particular: the huge increase in posted prices demanded by OPEC,
which, they said, was of such magnitude that its impact ‘could produce a

serious disruption in the balance of payments position of the Western world’;
and the looming threat of a cut-back in oil production by Saudi Arabia and
Kuwait. ‘We are convinced of the seriousness of the intentions of the Saudis
and Kuwaitis’, they wrote, ‘and that any actions of the U.S. government at this
time in terms of increased military aid to Israel will have a critical and adverse
effect on our relations with the moderate Arab oil-producing countries.’ The

four chairmen went on to express their apprehensions not only of the immedi­
ate danger of an oil-supply crisis but also of the serious possibility that
American oil interests in the Middle East would suffer permanent damage.
‘The bulk of the oil produced in the Persian Gulf goes to Japan and Western

Europe. These countries cannot face a serious shut-in. . .. We believe they will
of necessity continue to seek Middle East oil and that they may be forced to
expand their Middle East supply positions at our expense.’
Beyond the bare acknowledgement three days later of its receipt the
memorandum seems to have elicited no response from the White House. In the
interim President Nixon had authorized the dispatch of military supplies by air
to Israel. The meeting of the Arab oil-producing countries (OAPEC) called or

by Kuwait was due to take place in that shaikhdom on 16 October. The same
place and date had been chosen by the Gulf members of OPEC - Saudi Ara ia,
Persia, Kuwait, Iraq, Qatar and Abu Dhabi-at Vienna on 12 October or t eir

meeting to decide, as their public statement put it, upon ‘a course 0 co
action to determine the true value of the crude oil they produce . Th
little doubt about what was foremost in the minds of the oil minis
they assembled in Kuwait on the 16th. The war, now ten days; o , (he
OPEC the most plausible pretext it had ever had to push up prices,