Progress Reported in OPEC Bid to Raise Prices : Iran-Iraq Deadlock Over Oil Production Quotas Is Major Stumbling Block

VIENNA — Delegates to a meeting of the Organization of Petroleum Exporting Countries on Saturday reported progress in their laborious attempt to bolster the flagging price of oil, but they admitted that they had not yet solved the dispute between Iraq and Iran over how much crude oil each country should produce.

After a series of meetings Saturday, OPEC Chairman Subroto of Indonesia declared, “We are making good progress trying to bridge the gap that still exists.”

He said the Iraqi and Iranian delegates had met face to face Saturday but had not yet reached an agreement.

And Saudi Arabian Oil Minister Hisham Nazer reported “lots of progress.” But asked about a potential compromise between Iran and Iraq, Nazer said, “That will take some time to resolve.”

The ministers on the OPEC pricing and long-term strategy committees have been meeting at the organization’s headquarters and in various hotel rooms here since last Thursday. They are preparing a progress report that will be presented to the full session of delegates from the 13 member nations Monday.

Oil Ministers Participating

But, in terms of negotiating, the oil ministers from the key countries--Iran, Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Nigeria and Indonesia, among others--are already here and participating in talks. Only the ministers from Libya, Qatar, and Gabon have not yet arrived for the preliminary discussions.

Observers here say that if the key committee members cannot find a solution, there is no reason to believe that the full 13 members will do any better on Monday.

Subroto and the current OPEC president, Nigeria’s Rilwanu Lukman, are trying to get the members to agree to a daily pumping quota that would reduce the worldwide glut of oil and raise prices from the current level of about $10 a barrel for the benchmark Dubai crude to at least $15 a barrel--even though the official OPEC goal is $18.

Sticking Point

The main sticking point is the argument between Iran and Iraq over what Iraq’s quota should be. Iran has a daily quota of about 2.4 million barrels, while Iraq’s is only 1.5 million barrels. Quotas were originally based on the amount of oil reserves the OPEC nations have and how much they had pumped in the past.

But Iraq wants its quota to equal Iran’s and has in fact been pumping about 2.7 million barrels daily to make up for losses incurred in the Persian Gulf War, industry sources say. Iran is resisting all attempts to put Iraq on an equal pumping quota.

The oil dispute is exacerbated by the two Middle East neighbors’ eight-year war, in which a cease-fire was declared in August.

One possible compromise offered by other nations here would be that both countries observe an equal exporting quota, while Iran could pump at least 700,000 barrels more a day for its own population, which is three times that of Iraq.

In statements here, Iranian Oil Minister Gholamreza Aghazadeh and Iraqi oil chief Issam Abdul Rahim have said they would resist any compromise. Most oil industry analysts here believe that Iran will probably have to modify its position, otherwise Iraq will continue to keep production at full tilt.

Both Iraq and Iran have been pumping more than their OPEC quotas. In retaliation, countries such as Kuwait, the United Arab Emirates and Saudi Arabia have been doing the same--helping causing the slide in oil prices for cartel members.

Industry specialists say that failure to reach agreement on OPEC quotas during this meeting could drive the price of a barrel of crude oil to as low as $5. And if this were to occur, they suggest, it could mean the end of OPEC as an effective worldwide oil cartel.