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The 13 ministers of OPEC, along with delegates from five other producing countries, met late last month in Geneva in an attempt to patch together an agreement for sopping up the glut. The nine-day marathon session degenerated into what one delegate called "a state of unprecedented disarray." Even the meeting quarters seemed a mockery of the group's onetime ability to intimidate the industrial powers. Because most of the Hotel Inter-Continental was already booked, the ministers had to cram into a tiny conference room for their meeting.
Indonesian Energy Minister Subroto gamely tried to work out a compromise plan to cut production, but several delegates refused to budge. "Not one barrel," said Venezuelan Oil Minister Arturo Hernandez Grisanti, who is currently OPEC's chairman. Even as Saudi Arabia's Yamani was calling for other countries to cut back, he was at work in his Geneva hotel room lining up a large order for new oil deliveries, according to Kenneth Miller, executive editor of Petroleum Intelligence Weekly.
The OPEC delegates are scheduled to meet again on April 15 in Geneva to ponder further how to halt the price decline. Whatever is decided, the mere appearance of unity at that session would at least temporarily send oil / prices back up. But many experts doubt either that OPEC can reach an agreement acceptable to all its members or that members would actually honor any commitments to cut production.
The one factor most likely to rein in the Saudis would be pleading and threats from their gulf brethren. "The pressures on the Saudis will increase. They have to ask themselves whether they can continue to take the heat from countries that need oil revenues, and the answer is no," says Henry Schuler of Georgetown University's Center for Strategic and International Studies. Iran has claimed that its brutal February advance into Iraq was partly a warning to the Saudis. Said Iranian President Seyed Ali Khamene'i: "We shall respond to fists by fists. The price war is no less important to us than the military war at the front."
Tough talk like that demonstrates the ominous desperation of regimes suffering from dried-up oil dreams. Says Hormats: "The geopolitical impact of the oil-price collapse is immense and unpredictable." A Bank of America report issued last week predicts that average inflation in the Middle East will jump from 28% to 40% by 1988 and that the region's economic growth will be a slow 1% to 2% a year. Oil producers, especially those with heavy foreign debts, may pick the U.S. as a worthy target. Writing in the current issue of Foreign Affairs, Edward Morse, a former Deputy Assistant Secretary of State, maintains that the oil slump could further taint the attitudes of those countries "toward the West in general, and the U.S. in particular, provoking a likely nationalistic response based on a belief that Western governments somehow engineered the price collapse. It would possibly further fuel Islamic fundamental nationalism in the Persian Gulf."