THE PRESIDENT'S DAILY BRIEF 24 JANUARY 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007924
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 10
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: January 24, 1975

Declassified in Part - Sanitized Copy Approved for Release 2016/07/15 : CIA-RDP79T00936A0124-00010042-3
The President's Daily Brief
January 24, 1975
Declassified in Part - Sanitized Copy Approved for Release 2016/07/15 : CIA-RDP79T00936A012400010042-3
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Exempt from general
declassification schedule of E.O. 11652
exemption category. SB( I ),12).(3)
declassified only on approval of
the Director of Central Intelligence
?
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FOR THE PRESIDENT ONLY
January 24, 1975
Table of Contents
International Oil Developments: Demand for oil in
Western Europe and Japan is running below ex-
pected levels. (Page 1)
USSR: The Soviets conducted the fourth flight test
of their new solid-propellant IRBM--the
SS-X-20--yesterday. (Page 3)
Thailand: A conservative coalition government is
likely to result from parliamentary elections
this Sunday. (Page 4)
Notes: Jordan; PLO; Turkey; Cuba (Pages 5 and 6)
FOR THE PRESIDENT ONLY
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FOR THE PRESIDENT ONLY
INTERNATIONAL OIL DEVELOPMENTS
Demand for oil in Western Europe and
Japan is running below expected levels.
In Western Europe an unusually warm winter has
resulted in an extraordinary buildup of heating oil
stocks, and the economic slump has reduced demand
for industrial fuels. In Japan, industrial output
is continuing to fall and with it the demand for oil
products. Industry accounts for the bulk of Japan's
oil consumption.
The reduction of oil demand in Western Europe
and Japan has led to a virtual collapse of the oil
product spot markets and a major slowdown in re-
finery operations. Refiners geared to export
markets have been particularly hard hit. Rotterdam
and English Channel refineries are down to about
55 percent of capacity, while those in the Medi-
terranean and Singapore are operating at about 50
percent. Some Persian Gulf refineries are operating
at 75 percent of capacity, but the market is forcing
them to offer substantial discounts on some products.
Refineries supplying the US market are an ex-
ception to this trend. Relatively high US demand
has kept domestic refineries running at 90 percent
of capacity, while Caribbean refineries that supply
the US market are running at nearly 85 percent.
On the supply side, we are seeing some read-
justments in the crude oil market. Iraq, Algeria,
and Libya cut prices on their government-owned
crude oil effective January 1. This action reduces
the now overvalued transportation and quality dif-
ferentials these countries maintained last year and
is designed to restore their competitiveness with
crudes produced in the Persian Gulf. All three
countries saw their exports and market share decline
and are lowering prices to increase sales.
Venezuela also slashed its freight premium by
77 cents per barrel, but increased its income tax
rate. As a result of these adjustments, its govern-
ment revenue will increase 38 cents per barrel, and
its competitive position relative to Persian Gulf
producers will not change materially.
The transportation differentials built into the
prices of Mediterranean, Caribbean, and West African
crude oil were undercut by the sharp decline in
long-haul tanker rates. Tanker business is so bad
that a very large new French tanker was laid up im-
mediately after it was launched.
(continued)
FOR THE PRESIDENT ONLY
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FOR THE PRESIDENT ONLY
Free World crude oil output dropped more than
1 million barrels per day last month, partly as a
result of reduced demand. Kuwait and Libya cut
production 220,000 and 125,000 barrels per day,
respectively, because of reduced liftings. Accord-
ing to Aramco, a reduction of 750,000 barrels per
day in Saudi oil production was caused by storms at
its loading ports.
According to press reports, Kuwait is attempt-
ing to stimulate its oil sales by offering more
liberal credit terms. Gulf producers had been al-
lowing a maximum of 30 days to pay for their oil
without incurring additional charges, but Kuwait now
is allowing 60 days' credit on its open market sales.
The extra 30 days' credit is equivalent to a price
discount of about 10 cents per barrel on Kuwaiti
crude.
If the price adjustments in Iraq, Algeria,
Libya, and Kuwait lead to increased oil sales in
those countries, other OPEC producers will have to
make additional production cuts to hold the line on
prices. Last month we estimated that by late spring
there would be a surplus of at least 3 million bar-
rels per day on the world crude market unless pro-
duction were further reduced. The cuts made in
December go part of the way toward eliminating the
surplus, but more cuts will be needed. With several
producers now trying to boost sales, it is not clear
where these cuts are likely to occur.
A special meeting of OPEC's oil ministers,
finance ministers, and foreign ministers opens in
Algiers today. The meeting is expected to focus on
establishing a coordinated OPEC position on a wide
range of oil-related economic issues in preparation
for a summit meeting of OPEC chiefs of state later
this year. Items on the agenda for the meeting
include mechanisms for recycling petrodollars, oil
price levels, a joint strategy for the proposed
meeting of oil producers and consumers, and the
relation of oil prices to the prices of other com-
modities through indexing.
The OPEC ministers are also likely to discuss
recent actions by the US that affect their inter-
ests. The Latin American members are still up in
arms over their exclusion from the trade benefits
in the recent Trade Reform Act. The Middle Eastern
producers have so far made little comment about
either the trade bill or your tariff of $3 a bar-
rel on imported oil. Presumably the OPEC members
will develop a position on these matters at their
meeting.
2
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FOR THE PRESIDENT ONLY
USSR
The Soviets conducted the fourth
flight test of their new solid-propel-
lant IRBM--the SS-X-20--from Kapustin
Yar yesterday.
The new missile may be mobile. It is appar-
ently being fired from a launch site used in tests
of the SS-14, a mobile, solid-propellant IRBM
tested in the late 1960s.
A canister similar to the one used to launch
the SS-X-16 was seen recently on the launch pad
where the SS-X-20 is apparently being tested. The
SS-X-20, although smaller than the SS-X-16, may use
the same size canister. If so, it may be difficult
to distinguish between the two missile systems when
they are assigned to operational units.
3
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THAILAND
Thai parliamentary elections on
Sunday will conclude a 15-month transi-
tion from military to paramilitary rule.
The new government is likely to be a
conservative coalition.
The US embassy predicts that no one party will
gain a majority in the elections but that four con-
servative parties will win the largest bloc of seats.
Of these four, the Social Justice Party--backed by
army strongman Krit Siwara--is likely to poll the
greatest number of votes.
Should this forecast prove accurate, Krit, who
is also supporting two other conservative parties,
will remain the power behind the scenes, and the
military will retain its considerable influence
over the government. Politicians will find it dif-
ficult to form any government that will last very
long without Krit's blessing.
Whatever the leadership of the next cabinet,
there is little chance that the new government will
alter radically Thai domestic or foreign policies.
On the domestic front, the new government must con-
tinue to grapple with nagging economic issues such
as inflation and land reform. In the foreign
policy field, it will want to preserve Thailand's
close relationship with the US, while at the same
time appearing responsive to domestic pressures for
greater independence of the US. The new government
would probably be reluctant to give active support
to US policy objectives in Indochina if this would
seriously retard Thailand's efforts to improve re-
lations with its neighbors, particularly Hanoi and
Peking.
4
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NOTES
Jordan will pay its way this year on both de-
fense and development programs as the result of in-
creased Arab aid and record foreign exchange earn-
ings from the country's major industry--phosphate
production.
Arab transfer payments in 1975 will probably
exceed $340 million--over two and a half times the
support received last year from Arab sources. US
budget and military support for 1975 will push total
payments to Jordan to more than $500 million. With
world demand for phosphate fertilizers soaring,
Jordan's earnings from phosphates are expected to
increase from $60 million last year to $150 million
in 1975.
The Palestine Liberation Organization has asked
the UN for permission to establish an observer mis-
sion in Geneva. Once the UN forwards the request
to the Swiss government, Bern will have little
choice but to comply.
The PLO has focused on Geneva because the city
serves as European headquarters for the UN and be-
cause it is frequently the site of major interna-
tional conferences. The PLO, which already has ob-
server status at some UN specialized agencies, would
use its Geneva base to try to attain full membership
in them. The PLO may aim first at the World Health
Organization, which requires only a simple majority
vote for admission.
Turkey's First Army in Thrace was placed on
alert on January 20
The alert reportedly is intended as a gesture
to support Turkey's announced intention to resume
oil exploration in the AeaPan in Pphr11arx7
That alert followed the
exchange by Turkish and Greek leaders of tough
statements on their rights in the Aegean.
(continued)
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A high Cuban official who knew that his com-
ments would reach the US government has elaborated
on the approach now being considered among Cuban
leaders for reaching a rapprochement with the US.
He spoke in hypothetical terms, and his ideas
were expressed vaguely. He thought some arrange-
ment could be found to solve the issue of repara-
tions to US citizens and companies whose properties
had been seized, and he said Cuba might "respond
favorably" to a gradual lifting of the US embargo.
This is the first evidence that senior Cuban offi-
cials are considering concessions as a step toward
normalizing relations with the US.
6
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Top Secret
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