EFFECT OF ARAB CUTBACKS AND EMBARGOES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75B00380R000100090069-1
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 12, 2016
• Document Release Date: March 22, 2002
• Sequence Number: 69
• Publication Date: October 24, 1973
• Content Type: MF

Approved F ?A 2VgAApy2 g5dl~:tC.lAd gIJB00380R000100090069-1
WASHINGTON, D. C. 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:
Country Net loss
Current
Consumption
Percent decrease
in Consumption
U. S. A.
3 MBD '
17 MBD
18%
Europe
1 MBD
14 MBD
7%
Japan .
5 MBD
5 MBD
100/0
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.
OSD REVIEW,
COMPLETED
Thomas C. Reed
Approved For Releas et20 2/05/ e3 5BO0e3~BR006l~f 6X9-1
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 Approved For Release 2002/05/17 : CIA-RDP75B00380R000100090069-1
Sources of U. S. Oil, in millions of barrels per day
Crude Oil Imports
All Arab countries
1.06
6. 1%
Canada
.96
5.5
Nigeria
.48
2.8
Venezuela
.39
2.2
Indonesia
.25
1.4
Iran
.23
1.3
All other
.13
.7
Product: Imports
3.5, 20%
Caribbean* & Cent. Amer.
1.21
7.0%
Venezuela'
.74
4.1
Canada
.33
1.9
Europe
.28
1.6
So. America
.22
1.:3
All Arab countries
10
.6
All other
.08
15
3.0 ..
17%
U. S. Crude
9.6
56%
U. S. Gas Liquid Products
1.7
10%0
Inventory Buildup
(.5)
(3)%
Total U. S. Consumption
100%
"Offshore" refineries in Trinidad, Netherlands Antilles, Aruba,
Virgin Islands, Puerto Rico, etc.
Approved For Release 2002/05/17 : CIA-RDP75B00380R000100090069-1