Page 454 - Arabia the Gulf and the West

The ‘Sting’ 451

government to a maximum of 8.5 million b/d, of which no more than 65 per

cent was allowed to be drawn in Arabian light crude, i.e. primarily from the
Ghawar and Abqaiq fields. While the limitation was temporarily suspended
during the first few months of 1979 to help offset the loss of oil exports from
Persia, it was reimposed after Persian production began to pick up. From a
reported output of 9.5 million b/d in the first quarter of the year ARAMCO

was made to cut back to the limit of 8.5 million b/d.
Even without the constraints imposed by the Saudi government and the
problem of raising the large amounts of capital necessary to finance future
development of the oilfields, the fields themselves present formidable technical

obstacles, which there is not space to describe here, to the expansion of Saudi
*
Arabian oil production. Accidents like the Abqaiq fire, or unforeseeable Acts
of God, moreover, underline the risks of basing Western policy upon predic­
tions of future Saudi production levels. But there are other reasons for casting

doubt upon the willingness or ability of Saudi Arabia to act as ‘residual
supplier’ in the Western interest, particularly in order to keep oil prices down.
Despite numerous promises of price reductions, usually conveyed through the
mouth of Yamani, the price of oil has continued to rise and it has done so,

however much the Saudis and their Western apologists may endeavour to
camouflage the fact, with Saudi encouragement. William Simon, the United
States secretary of the treasury, told the Senate sub-committee on multi­
national corporations in July 1974 that Yamani had assured him that an auction

of Saudi Arabian oil would be held the following month, the intention of the
Saudi government being to demonstrate that the real market price of oil was
well below its posted price, and thereby to induce the other OPEC
governments to lower it. The auction never took place. Asked by the sub­

committee in May 1976 why it had not, James Akins (who had been the
American ambassador to Saudi Arabia at the time) explained that there was
opposition to the move from within the Saudi government as well as from
Persia, Iraq and Algeria. Because the United States government did not pursue
the matter, Akins added, Yamani and his masters concluded that it was not

really interested in bringing down oil prices. It is a pretty tale, its only flaw
eing that it omits to mention that a short time later, at an OPEC meeting in
u Dhabi in November 1974, Yamani took the lead in pushing through a

urther price increase which was completely unwarranted by prevailing
circumstances.
Two months later Saudi Arabia reduced her output of oil from 8.5 million to
7-6 million b/d. A further cut, to 6.5 million b/d, was made the following
month, February 1975, and for the same reason, viz. to prevent a glut in the oil

mar et’ which was then in a depressed state as a result of the economic

Senate For^ C^$5USSC<^ *n detail in a staff report to the sub-committee on international economic policy of the
obtained c*ati°ns Committee in April 1979, from which much of the above information has been