CONFIDENTIAL
SECRETARY OF STATE'S MEETING WITH HIGH COMMISSIONERS,
WEDNESDAY 21 NOVEMBER 1984
OIL PRICES
Essential facts
1.
At the beginning of October Saudi Arabia altered the
proportion of light crude in its export blend in favour of
increased volumes of medium and heavy: this amounted to a
price cut of about 50 cents a barrel. In the second week in
October the UAE was reported to be on the brink of announcing a price reduction. On 15 October the Norwegian state oil
company, Statoil, offered discounts of $1.35 to its customers
for the month of October. On 17 October BNOC therefore
proposed to reduce its prices too (the Brent marker going down from $30 per barrel to $28.65): had it not done so, it might
well have lost all its term customers.
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2. OPEC reaction was relatively restrained, though unfavourable.
Only the Nigerians whose crude sells into the same markets as
BNOC's were prompted to respond, reducing the price of their
principal light crudes by $2. There have been reports that
they may now be considering a two-stage increase. On 31 October
OPEC agreed to reduce overall production from 17.5 mbd to 16 mbd
on a temporary basis to protect the present price structurę,
with only Nigeria and Iraq exempted from cuts. The problem of
price differentials will be tackled at an OPEC meeting in
December.
3.
Of Commonwealth countries apart from the UK, only Nigeria
is a significant oil exporter (and OPEC member). Many Common- wealth countries would probably like lower oil prices and may be critical of the Government's attempts in August to keep prices up.
Energy, Science and Space Department
14 November 1984
CONFIDENTIAL