Life is getting scary in the oil markets
In the four years prior to 1978, crude was plentiful and often sold on the spot market for less than official OPEC prices. Then in late 1978, Iran quit exporting, and a severe winter in Europe drove stocks of heating oil far below their usual levels. Fear of shortages sent spot prices for heating oil up 112%, and crude prices followed. Many OPEC members realized that sticking to the cartel's official selling price was no longer in their interests. Some OPEC members are now pulling contracts out from under the majors and are selling directly to consuming nations. The move away from the majors has increased the chances that an end user will have its supplies disrupted, causing it to buy and stockpile supplies beyond storage capacity. The producing states' new dominance has had its greatest impact not on the majors but on a special class of customers who rely on the majors for much of their crude. These are the third-party buyers, a category that includes independent refiners, governments, and any other customer not directly associated with the majors' captive distribution networks. DOE estimates that some independent refiners have lost 40% of their third-party supplies; Japan has been informed that, as of March 1980, it will lose all of the oil it receives under third-party contracts. It now seems that none of the majors has enough crude to run its own refineries and to keep up supplies to its established third-party customers. And, when supplies are loose, cartel members are likely to cut production. One analyst has said that OPEC could fulfill all of their revenue needs and still slash production by about 70%. (MCW)
- OSTI ID:
- 5620457
- Journal Information:
- Fortune; (United States), Vol. 101:2
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
POLICY AND ECONOMY
02 PETROLEUM
OPEC
OPERATION
PETROLEUM
AVAILABILITY
PRICES
PETROLEUM INDUSTRY
MARKET
CARTELS
CONTRACTS
ENERGY SUPPLIES
EVALUATED DATA
GRAPHS
INVENTORIES
PETROLEUM REFINERIES
PROFITS
DATA
DATA FORMS
ENERGY SOURCES
FOSSIL FUELS
FUELS
INDUSTRIAL PLANTS
INDUSTRY
INFORMATION
INTERNATIONAL ORGANIZATIONS
NUMERICAL DATA
OIL-EXPORTING COUNTRIES
294002* - Energy Planning & Policy- Petroleum
020700 - Petroleum- Economics
Industrial
& Business Aspects