CIA Reading Room cia-rdp75b00380r000100090069-1: EFFECT OF ARAB CUTBACKS AND EMBARGOES
: (5 ee. she: fa \ i Fer" A Caen ‘ We, oat wh Sena OA. Approved For Release 2OQ 205i L4 : "GHRBRERBEOSoROND 10002008 -1 WASHINGTON, 0. €. 20301 October 24, 1973 MEMORANDUM FOR Secretary James R. Schlesinger . Secretary William P. Clements, Jr. SUBJECT: Effect of Arab cutbacks and embargoes Saudi Arabia, Algeria, Libya, Abu Dhabi, Bahrain, Qatar, Kuwait, and Dubai have embargoed oil sales to the U.S. as well as to areas that use crude for delivery to the U.S. (offshore refineries). They have also ordered additional production cutbacks across the board. The net result of these acts is a 4 million barrel per day reduction (9%) of the free world supply of oil. In addition, Kuwait and Algeria have just embargoed the Netherlands, further reducing supply by .5 MBD, for a total of 4.5 MBD. The Persian Gulf producers, meeting in London yesterday, independently ar- rived at a shortfall of 4.65 MBD, The embargoes are to be strictly enforced, with no substitutions or pro-rating for offshore refineries, Recognizing "ripple effects", the shortages will be distributed approximately as follows: . …
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: (5 ee. she: fa \ i Fer" A Caen ‘ We, oat wh Sena OA. Approved For Release 2OQ 205i L4 : "GHRBRERBEOSoROND 10002008 -1 WASHINGTON, 0. €. 20301 October 24, 1973 MEMORANDUM FOR Secretary James R. Schlesinger . Secretary William P. Clements, Jr. SUBJECT: Effect of Arab cutbacks and embargoes Saudi Arabia, Algeria, Libya, Abu Dhabi, Bahrain, Qatar, Kuwait, and Dubai have embargoed oil sales to the U.S. as well as to areas that use crude for delivery to the U.S. (offshore refineries). They have also ordered additional production cutbacks across the board. The net result of these acts is a 4 million barrel per day reduction (9%) of the free world supply of oil. In addition, Kuwait and Algeria have just embargoed the Netherlands, further reducing supply by .5 MBD, for a total of 4.5 MBD. The Persian Gulf producers, meeting in London yesterday, independently ar- rived at a shortfall of 4.65 MBD, The embargoes are to be strictly enforced, with no substitutions or pro-rating for offshore refineries, Recognizing "ripple effects", the shortages will be distributed approximately as follows: . Current Percent decrease Country Net loss Consumption in Consumption U.S. A. 3 MBD° 17 MBD 18% Europe 1 MBD 14 MBD 7% Japan 5 MBD 5 MBD 10% The "pipeline" is about three weeks long, i.e., deliveries to consumers will be running 18% short by November 15, Shortages will be worse unless air quality standards are temporarily relaxed, since the curtailed production was low-sulfur crude. The Arabs have indicated a willingness to end these cutbacks when Israel "returns to its pre-1967 borders", not upon a cease-fire, Almost unnoticed in this difficulty, most Arab countries have also virtually doubled the posted price of that crude which is delivered. The results will seriously unsettle the consuming nations' balance of payments. COMPLETED Thomas C, Reed Approved For P Release 2002/08/17 6 BIR PALER AUN GSONOS. Attachment < ~F sou : ‘Approved For Release 2002/05/17 : CIA-RDP75B00380R000100090069-1 Sources of U, s. eu in mailiiile of barrels per day Crude Oil Imports , \ All Arab countries 1,06 6. 1% Canada 96 5.5 : Nigeria ee 48 - “ee : a Venezuela 39 Que Indonesia . 225 1.4 Iran . 223 1.3 All other . 213 Per Totabivr 3.5 - 20% Product Suporte. Caribbean* & Cent, Amer. “421 7. O% Venezuela ; 74 4.) Canada te S3q s 1.9 Europe »28 1.6 All Arab countries oe EO +6 All other he OB <4 «5 Total 3.0. 17% U.S. Crude 9.6 56% U.S. Gas Liquid Products 1,7 10% Inventory Buildup , (65) (3)% Total U.S. Consumption Lied © + 200% * "Offshore" refineries in Trinidad, Netherlands Antilles, Aruba, Virgin Islands, Puerto Rico, etc, Approved For Release 2002/05/17 : CIA-RDP75B00380R000100090069-1