adjustments in other countries independents werent so flexible cut Occidentals

Adjustments in other countries independents werent so

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adjustments in other countries independents weren't so flexible cut Occidental's allowable in half; Sisters wouldn't help Occidental agreed to price increase Tripoli Agreement – 1972 all companies in Libya and Algeria agreed to posted price increase schedule for future price increases 55/45 profit split country/company 10. Tehran Agreement – 1972
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Iran wanted similar/better deal than Libya agreement signed in 1972, with schedule of price increases within months, agreements signed with Iraq, Saudi Arabia, others 'leapfrogging' effect – prices went up in one country, then another.. US currency devaluation encouraged more renegotiation 11. Participation/Materialization – Table 4.1 Libya nationalizes BP assets + other random concessions in the early 1970s Algeria nationalizes 51% of all French oil assets in 1971 Iraq nationalizes over half of its oil industry in 1972 other countries demanded stakes: initially 20% participation sought, was to rise to 51% by 1983 Kuwait held out, got 60% by 1974 in 1974, over 50% government ownership of oil in all Middle East and African countries transition to service contracting --> companies paid fixed price per bbl regardless of posted/market price end of concessions era buyback oil – companies agree to buy back countries' oil by 1973, buying back at 93% of posted price 12. Geneva Accords – 1972/73 in response to inflation/devaluation of US$, countries/companies agree to price increases to maintain real price of oil in 1972 second agreement in 1973, provision for monthly adjustments 13. 1973 Pre-Arab-Israel War world demand growth greatly outpacing predictions production in US falling since 1970 (Table 6.9 Dan) US imports more than doubled between 1969 and 1973; import share rose from 20% to 40% transactions/ market prices exceeded posted prices for the first time – Figure 3 OPEC controlled over half of worlds oil production, close to 2/3 of non-Communist production OPEC Control in the 1970s 1. Late 1973 October 6 – Egypt/Syria invade Israel (Yom Kippur War) October 8 – company and country officials meet in Vienna
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OPEC proposes effective doubling of price, companies offer 15% hike OPEC unimpressed independents already offering $5/bbl for participation oil October 15 – OPEC members meet in Kuwait unilaterally raise posted price from $3/bbl to $5.12/bbl October 16 – OAPEC members meet alone unanimously agree to cut oil production by 5% each month until Israel completely withdraws from Arab territories occupied in 1967 and rights of Palestinian people were restored total embargo to US and Netherlands, less to 'neutral' countries like Japan and Germany as well as 'friendly' countries Britain and France November 5 – OAPEC members agree to cut production 25% from September levels frenzy in spot markets for oil, prices going well above posted prices OAPEC countries unhappy that hostile countries (US) still
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