Foreign Relations of the United States, 1969–1976, Volume XXXVII, Energy Crisis, 1974–1980

296. Telegram From the Department of State to the Embassy in Kuwait¹

Washington, January 13, 1981, 2250Z.

9129. For Ambassador fm Under Secty Cooper. Subject: North Sea Oil Prices. Ref: Kuwait 48.²

1. Confidential entire text.

2. I agree that our criticism of oil price increases should not be reserved solely for OPEC or Arab producers. We have criticized other producers, including BNOC for increases in the past and are again approaching the British and Norwegians now re North Sea prices. At the same time, there are a number of differences between OPEC’s December 16 announcement³ (and previous OPEC price announcements) and the impending actions of North Sea producers which account for the milder tone and private nature of our representations to the British and Norwegian Governments. Most significantly, the OPEC announcements generally lead the way and establish the floor for official prices of all producers, OPEC and non-OPEC. Also, as London 119⁴ points out, announcement of BNOC’s (and Statoil’s) new prices will follow those of the African producers and are likely to be maintained slightly below the official prices (much less the prices with surcharges) of comparable African crudes. Finally, we have generally not spoken out publicly against price rises by individual producers, except in some cases where these have been clearly out of line with prevailing price levels, e.g. Iran in 1979. In our public statements on OPEC decisions, we have generally noted our appreciation to those OPEC countries, e.g. Saudi Arabia, which have shown restraint.

3. You may draw on the above, including the fact that we are making representations to the North Sea producers in your conversations with Kuwait officials as you deem appropriate.

4. Septel⁵ follows providing talking points requested Kuwait 104.⁶

Muskie

1. Source: National Archives, RG 59, Central Foreign Policy Files, D810018–1028. Confidential; Immediate. Drafted by Knickmeyer, cleared by Patterson, Twinam, Morse, Johnston, Conway (E), and Hecklinger (DOE/IA), and approved by Cooper. Repeated Immediate to Jidda, London, Oslo, Abu Dhabi, Doha, Paris, Jakarta, Caracas, Algiers, Lagos, Cairo, Mexico, and USOECD Paris.
2. See footnote 2, Document 295.
3. See footnote 6, Document 292.
4. See footnote 2, Document 295.
5. Document 297.
6. In telegram 104 from Kuwait, January 10, the Embassy informed the Department that a Kuwaiti Ministry of Oil source had confirmed a Reuters report that Kuwait had “imposed a $4 per barrel increase in its official selling price to $35.50 per barrel retroactive to January 1.” With premiums, the weighted average contract sales price “would probably be a bit over $39/barrel.” The Ambassador had requested an appointment with Oil Minister and Kuwait Petroleum Company Chairman Ali Khalifa to inform him that the $4 per barrel increase was “distinctly unhelpful.” The telegram concluded: “If Department has any particular points that should be made at that meeting, these should be cabled as soon as possible.” (National Archives, RG 59, Central Foreign Policy Files, D810014–0304)