291. Telegram From the Department of State to the Embassy in Saudi Arabia1

327156. For the Chargé. Subject: Presidential Letter on Oil Market Situation.

1. (Confidential—entire text).

2. The following message from the President to Prince Fahd should be delivered as soon as possible, preferably by Secretary Duncan. Suggest you work out how best to deliver and advise us when and to [Page 917] whom delivery was made. Similar Presidential letters are being sent to Indonesia, Nigeria, and Venezuela.2

3. Begin text:

Your Royal Highness:

I believe that all nations should be gratified by the recent parallel actions of oil exporting nations and industrial nations to avert an oil crisis during the war between Iraq and Iran. We can take justifiable pride in our success, thus far, in preventing further inflationary blows to the economies of all countries.

As you know, a more severe test will come during the winter months of normally higher oil demand if the curtailment of oil exports from Iraq and Iran persists without a clear prospect of peace. In this situation it is important that all parties cooperate in coping with the shortages created by the war. For their part, the industrial nations agreed in Paris yesterday to reduce by about 10 percent (2.2 million barrels per day) their demand for oil on the world market in the first quarter of 1981, to discourage purchases at high prices, and to work with oil companies to correct imbalances of supply among countries.3 These measures to balance the market complement the helpful actions of Saudi Arabia and other oil producing nations in providing increased supplies to countries formerly dependent on Iraq and Iran. Saudi Arabia’s substantial increase in production has been particularly appreciated throughout the world. Energy Secretary Duncan will brief Minister Yamani on details of the measures agreed to in Paris.

Together we can assure a balanced oil market and relieve pressures on oil prices until Iraq and Iran resume normal exports. By stabilizing the oil market we will help many developing nations avert external payments crises and enable the industrial nations to avoid simultaneous recessions and aggravation of inflation.

If you agree that these must be our common objectives at this time, I hope you will reflect this conviction in your national oil production and pricing policies and in Saudi Arabia’s position at the OPEC conference in Bali next week. I assure you that the United States and other in[Page 918]dustrial nations are determined to do our part to maintain stability in the oil market and thus to contribute to the world’s economic health.

Sincerely,

Jimmy Carter

His Royal Highness

Prince Fahd Ibn Abd Al-Aziz Al Saud

First Deputy Prime Minister of Saudi Arabia

Riyadh

End text.

Christopher
  1. Source: National Archives, RG 59, Central Foreign Policy Files, D800588–1002. Confidential; Niact; Immediate; Exdis. Drafted by Poats; cleared by Twinam and in EB/IEP/EPC, E, and the Energy Department; and approved by Johnston.
  2. Brzezinski recommended in a December 9 memorandum that Carter send the letters. He wrote: “Pursuant to your exchange of letters with President Giscard, the energy ministers of the US, Britain, France and Germany agreed on a common approach to OPEC countries designed to encourage them to adopt a price freeze at the OPEC meeting in Bali next week. The main feature of these joint approaches will be letters to heads of government with whom one or more of these four governments has potential influence.” Carter checked the Approve option on the memorandum and initialed it on December 10. (Carter Library, National Security Affairs, Staff Material, Middle East File, Box 84, Subject File, Saudi Arabia, 11–12/80) Copies of all four letters are attached to a December 9 memorandum from Poats to Brzezinski. (Ibid.)
  3. See Document 292 and footnote 2 thereto.