OPEC Pricing Policy for Oil A New Framework

Framework B J TWO recent developments in the oil markets have caused concern among both oil-importing and oil-exporting countries. The first is the growing division within OPEC ranks with regard to the appropriate level of oil prices. One group of oil producers, led by Saudi Arabia, has tended to favour a policy of restraint in regard to further increases in oil prices while another group, led by Iran and Libya, has favoured a more aggressive pricing policy. This division became particularly evident at the recent meetings of the Oil Ministers (in Venezuela and Algeria) which failed to reach a consensus on re-introduction of a uniform system of prices for OPEC. A second development has been the emergence of an active 'spot market' for oil in Rotterdam. Traditionally the spot market accounted for only 3-4 per cent of all transactions; however, in 1979, as a result of events in Iran and uncertainty regarding OPEC policy, a much larger volume of oil was sold through this market.