CRUDE OIL PRICES SINCE 1970

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900010127-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: December 19, 2016
• Document Release Date: May 23, 2006
• Sequence Number: 127
• Publication Date: January 22, 1974
• Content Type: MF

25X1
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 , Approved For Release 2006/09/26: CIA-RDP$5T00875R001900010127-7
SUBJECT: Crude Oil Prices Sire 1970
The attached paper was prepared by
22 January 1974
as an input for a briefing of Undersecretary Donaldson, it
response to a request by
Deputy Director 25X1
of the Office of Economic Research avid F:ialysis, Department
on 22 January 1974. 25X1
Internatibnal Energy and Resources Branch
Attachment:
as stated.
Distribution: (S-584G)
1 -
D/OER
1 -
SA/ER
PT--
ST PC
1 -
1 -
D /I
1 -
I/IE
1 -
NIO/Energy
OER/I/IF 17 7 (22 Jan 74)
CONTIDENTIAt
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/1 ',;? e t~ p 11I'
.IiJld? ~ni L\ Silir.
Crude Oil Prices Since 1970
Since 1.970, the establishment of posted prices has taken
f
a full 180 degree swing from postings set unilaterally by the
oil companies to unilateral changes by the producing states.
In the intervening four years, the governments negotiated
increases in posted prices, tax rates, and their 'own parti-
cipation in oil operations. The producing states strength
grew as the seller's market vanished under the consumption
demands of Western Europe and Japan, and as the United States
turned more to imported oil.
Most oil exporting countries saw no upward revision in
posted prices between 1958 and late 1970. instead, they realized
a decline in the value of their oil dollar as revenues per
barrel remained, constant against rising prices for imports.
Libya was the first state to attempt to reverse this trend.
In the fall of 1970, after a year of negotiations, a new agree-
ment was reached which gave Libya increased governmentt.revenue
per barrel by posting a higher price and a greater tax rate.
In a matter of months, the Persian Gulf States reached a similar
agreement with companies operating their concessions. This
agreement was formalized in Tehran on 15 February 1971.
The Tehran agreement included provisions for inflation
(2X a year), the Suez Canal, closure, and freight premiums.
Participants hailed it as a "once and for all agreement" which
would stabilize prices for years to come. It took Libya just
one month to renegotiate their contracts to better the Persian
Gulf.
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Two dollar duvaluatious caused now negotiations of posted
prices as producing status continued to worry about the cro-
sion of their oil dollar. The first agreement, Geneva "I",
established a complicated formula to adjust postings. In
its first real test, the February 1973 devaluation, it failed;
and a new accord was reached, Geneva "II". Over he course of
1973 there were several posted price changes as currencie?.
fluctuated azound the dollar. However, a more important force
was at work which had not been adequately consIs:ered in posted
price revisions -- consumer demand.
The entrance c.: the US as a major importer of crude oil
and rapid increases in consumption in Western Europe and Japan
were being reflected in substantial increases in product prices,
tanker rates and oil company profits. Only government per
barrel revenues were not increasing at the rates experienced
in other sectors of the industry. On October 16, 1973, and
again on January 1, 197.4 in a move to capture the "true value"
of their oil, producing states unilaterally pushed posted
prices up to where government take per barrel was at what they
considered to be a fair market price. The 1 January 1974
price inc:_ease had been effectively backstopped by the OAPEC
production cut.
CL-OER
22 Jan 74
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Iraq
Saudi
Arabia
A
Iran D
bu
habi
Libya
Algeria
Nigeria
API gravity
(degrees)
35
34
34 3
9
.40
43
34
Sulfur content
(percent)
2.1
1.8
1.4
0.7
0.2
0.15
0.14
US S per Barrel
1973
'
1 Jan
....
2.13
2.15
2.38
3.28
?...
1 Apr
....
2.30
2.32
2.75
3.75
3.80
1 Jur.
....
2.70
2.76
...?
4.00
1 Jul
....
..
....
....
....
....
4.25
1 Aug
3.48
2.88
....
3.20
5.50
....
...?
1 Sep
....
....
....
3.00-
....
5.00
....
I Oct
3.00
2.80
2.85
3.25
5.85
...
5.20
16 Oct
3.62
3.65
3.64
4.32
I Nov
3.66
????
8.50
6.61
6.84
I Dec
....
16.00-17.40
?...
....
.?..
16.80
(bids)
(bid)
CIA/11_R
22 Jan 74
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Saudi.
Arabian
Light
Abu
Dhabi
Murban
Libyan
40
Iraq
Kirk VCnc,z
36 26
1970
January 1
1.80
1.88
2.23
2.21
September ].
(First nego-
tiated price
change)
2.53
2.41
1971
January 1
1.80
1.88
2.53
.2.41
February 15
(Tehran)
2.18
2.235
March 20
(Id.byan Supp)
3.447
3.211
June 1 (Tehran)
2.285
2.341
1972
January 1
2.285
2.341
3.386
3.136
January 20
(Geneva "I.")
2.479
2.540
3.673
3.402
1973
January 1
2.591
2.654
3.777
3.484
April 1
2.742
i
2.808
4.024
3.712
June 1
(Geneva " II")
2.898
2.968
4.252
3.921
October 1
3.011
3.084
4.604
4.243
October 16
(OPEC First
Unilateral)
5.139
6.045
8-19252/^
7.213
1974
January 1
(OPEC Second
Unilateral)
11.651
12.768
15.768
{L7.00}b/
a/
October 19th.
"Contract price" asked by INOC.
CIA/OER
22
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