The Michigan Daily-Saturday, September 6, 1980-Page 9

HIGHER PRICES EXPECTED
Saudis maycut oil output
By The Associated Press

FEELI

G

Saudi Arabia, the world's largest petroleum exporter
d America's prime source of foreign oil, was reported
terday to be planning to cut its oil output as early as next
month.
The Financial Times of London said Saudi Arabia's Oil
Minister, Sheikh Ahmed Zaki Yamani, told the British
foreign secretary, Lord Carrington, during a meeting last
week of the planned production cut. The newspaper said the
size of the intended reduction was not known.
MEANWHILE, THE newspaper Al Bayrak in Beirut,
Lebanon, said. the Saudis are "seriously considering"
reducing oil output before a conference of Organization of
4troleum Exporting Countries heads of state to be held bet=
een Oct. 25 and Nov. 4 in Bahgdad, Iraq.
The reports could not be immediately confirmed by
government sources in Washington or by Arabian American
Oil Co., the U.S.-owned consortium which produces most of
SaudiArabia's 9.5 million barrels-a-day oil output.
Saudi Arabia raised its oil output by one million barrels a
day last summer during a worldwide scramble for supplies
touched off by a revolution and sharp drop in oil production in
Iran..
INDUSTRY SOURCES, WHO requested anonymity, said
a Saudi output cut of one million barrels a day would not be
unlikely. They said the cut could be coupled with a price in-
ease of at least $2 a barrel, raising Saudi Arabia's $28-a-
rrel oil price near the OPEC's suggested $32 base price.

According to the Energy Department, the United States in
the first five months of 1980 received about 1.3 million 42-
gallon barrels of Saudi oil daily, amounting to eight per cent
of its petroleum needs.
But analysts said the anticipated Saudi moves might not:
have a major immediate impact on prices of petroleum
products, given the surplus that has developed following a 132
per cent jump in world oil prices since the beginning of 1979.
"REFINERS HAVE ABOUT 150 days' worth of crude in
their inventories, so even a one million-barrel-a-day cut
would take several months to affect the market," said one oil
trader.
"I don't think (OPEC) really has accounted for conser-
vation efforts.under way in this country," and for increases
in U.S. oil and natural gas output spurred by the lifting of
domestic price controls, said J. B. Chalfant, editor-in-chief of
the trade newspaper Platt's Oilgram Price Report.
A Saudi production cut, on top of earlier reductions by
several other OPEC states, "should take some of the
pressure off the market for crude and eventually for produc-
ts," especially "if the economy comes back next year," said
analyst Warren Shimmerlik at the brokerage house of
Merrill Lynch, Pierce, Fenner & Smith Inc.
. The oil surplus-estimated by Petroleum Intelligence
Weekly at nearly 400 million barrels, or an eight-day supply
for the industrialized world-for now has halted the OPEC
price spiral that began in late 1978.

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Polish
a der
ierek
replaced
(Continued from Page D
Politburo member.. The Central Com-
mittee unanimously appointed
Stanislaw Kania as first secretary par-
leader of the Central Committee."
he deputy speaker of parliament
announced the heart attack in a low-key
message, saying Gierek had suffered
"disturbances in the heart" and had
been hospitalized.
After the statement was read,
parliament, which was meeting for the
first time since the crippling labor
strikes were settled, returned to
business as usual.
"Details of the party chief's condition
ere not given in the statement signed
by Health Minister Marian Sliwinsky.
GIEREK FAILED TO attend the
morning's opening session of
parliament and his unexplained absen-
ce immediately stirred speculation he
was about to lose his job in the wake of
Poland's labor unrest. Another rumor
had it that Gierek had been abruptly
summoned to Moscow to discuss the
strikes and the unprecedented con-
cessions the government was forced to
*ant to end them.
The announcement of Gierek's heart
attack put to rest the latter rumor but,
if anything, increased speculation that
the party chief, who came to power
following a previous bout of labor strife
in 1970, may be on his way out.
Observers said Gierek's now uncer-
taih health, coming on top of the
workers' unrest and the still unfolding
corruption scandal, could only com-
icate his fortunes. They said the
'ement read in parliament appeared
to be deliberately low-key-possibly a
sig& the government was preparing the
co try for a change in its top' leader-
shi
lemier Edward Babiuch and four
othe politburo members were fired
Au 24 during the height of the unrest
th in three weeks mushroomed from a
shiard strike on the Baltic Coast to a
nat nwide walkout by more than
Q0 factory workers and coal

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