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

142372. Subject: Oil Prices: Message From the Secretary to Crown Prince Fahd.

1. Please deliver the following letter from the Secretary to Fahd:

2. Begin text:

Your Royal Highness, your recent visit here2 did much to reaffirm and strengthen the relationship between our two countries. The President and the others of us who were privileged to meet with you benefitted greatly from your views and counsel on a wide variety of issues. We shall wish to keep in close touch with you on the broad range of matters affecting the common interests of our nations.

I would like to raise with you at this time one subject of very high and continuing importance to both of our countries and also to the global economy: the question of oil prices. When you were here, the President expressed our appreciation for the policy of your government on this subject, and we were extremely pleased to hear your reaffirmation of the determination of the Kingdom of Saudi Arabia to continue its course of moderation with regard to oil prices.

Following your visit, there have been some reports to the effect that your government intends to increase the price of Saudi oil by five [Page 499] percent within the coming month, in the context of the forthcoming OPEC meeting. These same reports state that the eleven members of OPEC which increased their prices by ten percent last January3 would forego any additional price increase until the end of 1977. We do not know whether these reports are correct.

From our point of view, it appears clear that the interests of the global economy would be best served by avoiding further increases in the price of oil. With regard to any possible price increases which your government might be planning for the remaining months of this year, we trust that you are also considering the desirability of achieving an understanding that would call for a period of stability in the prices of the other producers beyond the end of 1977.

I would value greatly your sharing with me your thoughts at this time on the prospects for oil pricing in the months ahead. As we agreed during your visit here, continued cooperation between our two countries on energy matters will remain of the highest importance. For our part, the President is continuing to press his proposals for a United States energy program that places special emphasis on the need for maximum conservation, and we will wish to keep you informed of the progress of our efforts in this regard. The President has asked me to convey to you, and through you to King Khalid, his warmest wishes and his hopes for your good health. I join in these wishes and hopes. Sincerely, Cyrus Vance.

End text.

  1. Source: National Archives, RG 59, Central Foreign Policy File, D770218–1164. Secret; Immediate. Drafted by Sober; cleared by Julius L. Katz (EB), Tarnoff, Quandt, Bergold (White House), Roger R. Gamble (S/S–O) and in substance by Cooper; approved by Vance. Also printed in Foreign Relations, 1969–1976, vol. XXXVII, Energy Crisis, 1974–1980, Document 126.
  2. See Documents 150 and 151.
  3. Reference is presumably to the OPEC meeting at Doha in December 1976 when 11 OPEC members raised the price of oil by 10 percent. See footnote 8, Document 143.