Tehran Agreement 1971

by on April 12, 2021

In addition, several consumer countries may be forced to attempt direct oil negotiations with producing countries. OPEC and the Organization of Arab Petroleum Exporting Countries (OAPEC), their purely Arab arm, have ripped off this siren. And the appeal is reflected in a recent statement by a Spanish government official. He lamented that consumer countries were not represented in the Tehran negotiations and warned that Spain would try to get more oil through formal agreements with the Middle East and North African governments – and thus bypassing businesses – and paying by increasing exports to those countries. But it should be noted – emotional reactions to 1970-71, although direct negotiations between consumer and producing governments were not attractive either on the terms of trade or on security of supply, as shown by France`s experience with Algeria. Moreover, such negotiations still risk turning trade disputes into political confrontations between governments, which could doubly disrupt the vital oil trade. On 2 April 1971, the tripoli group`s negotiations resulted in a 90-cent increase in the price of OPEC oil in the Mediterranean, well beyond the Tehran agreement. The Tripoli group included Libya and Algeria, as well as Saudi Arabia and Iraq, as part of their production arrived in the Mediterranean by pipeline. The Shah was furious when he felt he had been jumped. The most obvious consequence of the recent round of oil agreements is the significant increase in the revenues of producing countries from $7 billion in 1970 to about $18.5 billion by 1975 (without the new conditions, OPEC members` oil revenues would have increased to $10 billion in 1975). The impact on consumer countries will therefore be enormous. The cost of European oil imports was about $9.5 billion in 1970; By 1975, the increase in the costs of new OPEC settlements for Western Europe will reach up to $5.5 billion; For Japan, the increase will exceed $1.5 billion (the oil import bill was in the order of $2.5 billion last year).

For developing countries, which cost about $2.1 billion in oil imports in 1970, the cost of OPEC`s advances for 1975 will be about $1 billion; For these countries, higher costs are likely to exacerbate new adverse chronic balances of payments. [iv] Unlike industrialized countries, which expect at least some intensification of export trade with oil-producing countries and, in addition, a large inflow of financing through their banking systems, less developed countries will find it difficult to offset the burden of their resources. In this context, an OPEC meeting was held in Caracas in December 1970, at which a wide range of requirements were formulated, inviting oil companies to submit an acceptable offer within a provocative time frame and, failing that, to initiate swift joint action. After the scene was transferred to Tehran, negotiations took place between OPEC and a joint industrial group, which negotiated on behalf of all. In February 1971, the Tehran agreement was whipped under the constant threat of OPEC from the adoption of the legislative legislature of the common government of its demands and the cessation of production for any company that did not respect time.

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