178. Telegram From the Department of State to Selected Diplomatic Posts1
326855. Subject: U.S. Position on OPEC Price Increase.2
1) At their discretion Ambassador and senior Economic Officer should take the occasion, when it is appropriate, to inform senior levels of the host government of the U.S. Government’s reaction to the OPEC oil price increase. We do not wish you to make a formal démarche at this time, but we also do not wish to leave an incorrect impression about this government’s position. Talking points follow:
2) The U.S. very much regrets the recent OPEC price increase, which we do not believe warranted by underlying market conditions or by other considerations.
3) Prior to the OPEC meeting, we had made clear our desire that, if an oil price increase could not be avoided, it should be an extremely moderate one in order to minimize damage to international economic recovery. The four-stage price increase just announced, culminating in OPEC oil prices 14.5 percent higher nine months from now, cannot be considered moderate in its impact on the world economy.
4) This large price hike clearly has prejudiced the U.S. and world economic outlook, and will impede programs to maintain world economic recovery and to reduce inflation.
5) The oil price increase will also unfavorably affect global trade. It will not only impose the burden of additional import costs on all oil-importing countries but will also reduce overall export opportunities as economic growth becomes more difficult to achieve in all industrialized and oil-importing developing countries.
6) The strong reaction by other oil-consuming nations to the price increase gives ample evidence of the serious and widespread concern over the harm it will likely do to the achievement of the universal economic goal of sustainable non-inflationary growth.
7) The OPEC members themselves have an important stake in the world economy. They must share the responsibility for the success of programs designed to improve payment balances, maintain economic growth, and reduce inflation. We are disappointed, therefore, that [Page 571] OPEC’s decision to date has not given adequate consideration to the world economic situation, and the basic oil market conditions.
8) For Jidda: FYI—We are considering further approaches to the Saudis concerning their production ceilings and the Iranian production situation. But you should proceed now to make appropriate use of the points in this message.
9) For Tehran: Department leaves to your judgment the advisability of making an approach at this time.
- Source: National Archives, RG 59, Central Foreign Policy Files, D780539–0146. Confidential. Drafted by James C. Todd (EB/ORF/FSE); cleared by Rosen, Bosworth, Katz, Twinam, Solomon, and in NEA/RA; and approved by Cooper. Sent to Riyadh, Abu Dhabi, Algiers, Baghdad, Caracas, Doha, Jakarta, Jidda, Kuwait, Lagos, Libreville, Quito, Tehran, Tripoli, and Dhahran.↩
- See footnote 2, Document 176.↩