Word: bbl
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OPEC is counting on a surge in demand to firm up prices. For several weeks, oil refiners have been shunning OPEC crude and drawing down their inventories at a particularly rapid clip-some 4 million to 5 million bbl. per day-in anticipation of price cuts. At some point, the refiners will have to start rebuilding their stocks. In addition, the emerging economic recovery in the industrial nations could spur oil consumption and send prices back...
Even if demand bounces up to OPEC's target level of 17.5 million bbl. per day, the group still faces the danger of widespread cheating on quotas. Similar production agreements in the past have crumbled as several countries, including Iran, Nigeria and Venezuela, offered under-the-table price discounts to raise sales. These nations are buffeted by economic and financial difficulties that will make more cheating almost irresistible...
...that tall bar on the opposite page attests, the biggest oil producer in the world by far is not Saudi Arabia, or even the Persian Gulf nations combined, but the Soviet Union, which is pumping at the rate of 12 million bbl. per day. The U.S.S.R. is at present also the world's largest oil exporter (more than 3 million bbl. per day), and while most of its oil is sold to Eastern Europe and Cuba, more than 1 million bbl. per day go to Western Europe, and that figure is growing...
...strategy worked. Last year, even with Western oil imports falling, Soviet sales to the West rose from 1.1 million bbl. per day in 1981 to a rate of almost 1.5 million by the end of 1982. Goldman believes that Soviet oil exports to Italy doubled. This year, the Soviets let news of their price cuts seep out. The first cut, from $31.50 to $29.35, came in January. Last week, after OPEC announced its new $29 bench mark, word spread that the Soviet Union had cut prices again...
...blessing: the controversial Soviet natural-gas pipeline is much less attractive than before. Among the terms the Europeans granted the Soviets was a guaranteed floor price on 80% of the gas delivered. It was pegged to correspond with the benchmark price then in effect for OPEC oil: $34 per bbl...