Page 447 - Arabia the Gulf and the West

444 Arabia, the Gulf and the West

obedient posture? The obvious ones are a reduction in output and the im­

position of an embargo, probably under cover of redress for some political
grievance or other to give it a spurious respectability. A reduction in output,
needless to say, depends for its effectiveness upon the state of the market and

the level of world consumption at the time. It also calls for the exercise by the
Arab oil states of a degree of self-restraint and disciplined co-operation which,
on the evidence of their past showing, they may not be capable of attaining. ’
In 1975 these states supplied 58 per cent of world imports of oil (outside the
communist bloc) and 52 per cent of the requirements of the countries which

make up the membership of the International Energy Agency. On the basis of
these figures, to cause a 25 per cent loss of supply to the IEA countries (which
would be equivalent to an import loss of 36 per cent), the Arab oil states would
have to reduce their production by well over 60 per cent. If, for example, Libya

and Iraq, which failed to participate in the embargo in 1973, refused to
co-operate in the cut-back, the remaining Arab oil-producing countries would
have to reduce production by between 80 and 90 per cent to achieve the same
effect. Alternatively, if Saudi Arabia held aloof, all the other states together

could not impose a 25 per cent reduction in IEA supplies even if they curtailed
production completely.
The above calculations are based upon the stockpiles of oil which the lEA’s
member states have built up, or are supposed to have built up, since the end of

1974. The distinction is important. The average stockpile held by each
member country in 1977 was said to be roughly equivalent to eighty days’
consumption, and all members have undertaken to attain a ninety-day level by
1980. However, what is not clear from the IEA’s returns is whether the figures

represent actual reserves or whether they also include oil stocks in situ, i.e. oil
held by industries or in the pipeline, which, though necessary to the efficient
functioning of an emergency system, should not properly be reckoned part of a
strategic reserve. Whatever the case may be, it remains that the industrial

countries are in somewhat better condition now to resist intimidation by the
Arab oil states than they were in 1973 - which is why Kuwait urged her fellow
Gulf states in the early summer of 1979 not to increase production to offset the
temporary shortages in the IEA countries but to force them instead to run

down their stockpiles.
It has been estimated that it would take a cut-back in oil production by t e
Arab oil states of 60 per cent for a period of six months to exhaust the present

IEA stockpiles. The loss of revenues which the Arab governments cou
expect to suffer as a consequence of such a cut-back would be ormi a
enough to make some of them, at least, hesitate before committingthemsel
t0 this course. On the basis of their output and revenues for !976, ^example,

it has been reckoned that a 60 per cent loss of earnings for six
have amounted in the case of Saudi Arabia to around ^bi to
of Kuwait and Iraq to about $2,600 million each, and in