Saudi Arabia Is Expected to Up Oil Production : Nation to Stay Within OPEC Quotas, King Says

MECCA, Saudi Arabia —  Saudi Arabia’s King Fahd said Monday that if other OPEC members wish to cut oil prices, Saudi Arabia should have the same freedom, as long as production stays within OPEC quotas.

The king’s statements, distributed by the official Saudi Press Agency, left no doubt that the kingdom intended to go ahead with widely reported agreements to increase its oil sales from a 20-year low by selling oil at market-related prices that are well below the official prices of the Organization of Petroleum Exporting Countries.

Addressing university students as he laid the foundation stone for Umm Al-Qura University in Mecca, Fahd said that Saudi Arabia does not interfere in the affairs of other OPEC member states that have have been undercutting OPEC’s official prices or bartering oil for imports.

“For the kingdom of Saudi Arabia, it is the same case,” he was quoted as saying. “What others permit themselves, we do not forbid for ourselves.”

In addition to the reported Saudi agreements with major companies to sell oil at prices $2 to $3 a barrel below OPEC’s official price, Saudi Arabia also is reported to have bartered crude oil for part of the payment in a recent deal to buy British jet fighters.

The kingdom produced nearly 10 million barrels of oil a day in 1980 and had the potential to produce more, but Fahd said it reduced production to try to shore up world oil prices.

But now, Fahd said, he had asked his oil minister, Ahmed Zaki Yamani, to advise OPEC members that “we are never the guardians of anyone. . . . We are but one of the members of the organization.”

It was the strongest in a series of statements that the Saudis have abandoned their role as lone defender of OPEC’s prices.

Under OPEC’s production limits, Saudi Arabia is allowed to produce 4.35 million barrels of oil daily out of a total OPEC limit of 16 million, but the Saudis have kept production lower to make up for cheating by colleagues.