Page 400 - Arabia the Gulf and the West

The 'Sting1 397

absolute assurance, furnished by the supine conduct of the Western powers
over the preceding three years and by the current agitation in the West at the
thought of an oil shortage, that the industrial nations would swallow any increase.

The day of 16 October, therefore, was given over to excited discussions
about the levels to which prices could be raised, with Amuzegar reportedly
pushing for the topmost limit. That night the decision was made public. The
posted price of the Gulf marker crude (standard Arabian light) was raised from
$3.01 to $5.11, an increase of 70 per cent, effective immediately. The Tehran

agreement was scrapped, and with it the obligation to vary posted prices in
accordance with the international value of the US dollar - then still moving
upwards. Henceforth the posted price was at all times to be 40 per cent above
the market price of oil, so as to ensure continued high government revenues.
All manner of variables were introduced for the calculation of the tax-reference
prices - the specific gravity of oil as it came from the ground, sulphur content,
distance from markets and so on. Partly these were designed, as in the past, to
provide Libya, Algeria and other OPEC members with the price differentials

which their geographical location and the quality of their oil warranted. Partly,
however, they arose from the atmosphere of confusion and emotion in which
the discussions were conducted.
The following day the Arab oil ministers turned their attention to the
associated issue of restrictions upon oil production. While they deliberated, in

Washington the acting Saudi minister for foreign affairs, Omar Saqqaf,
handed President Nixon and the secretary of state, Henry Kissinger, a letter
from King Faisal stating that, if the United States did not within forty-eight
hours halt the dispatch of arms to Israel, an embargo would be placed upon the
shipment of oil to the United States. Saqqaf was told in reply that the United
States was committed to aiding Israel. Late that same night in Kuwait, after

seven hours of debate, the Arab oil ministers issued a communique announcing
that all members of OAPEC would reduce their oil production by 5 per cent
each month. The measure would be back-dated to the end of September, and
the September production figures would be taken as a basis for calculating the
reduction. Any member of OAPEC would be free to make greater reductions,
if it so desired. The process of reduction would continue at the same rate, the

communique stated, ‘until the Israeli forces are completely evacuated from all
the Arab territories occupied in the June 1967 war, and the legitimate rights of
the Palestinian people are restored’. There would be no respite from the
progressive hardship imposed by these measures,

unless the world community arises to put matters in order, compel Israel to withdraw

rom our occupied lands and make the United States aware of the exorbitant price the
great industrial states are paying as a result of its blind and unlimited support for Israel.
A crumb of comfort, however, was held out to those countries which might

e to take the correct’ attitude to the conflict — or, as the communique