SOVIET ACTIONS DURING THE RECENT OIL CRISIS (S-6486)

Created: 9/23/1974

OCR scan of the original document, errors are possible

CIA HISTORICAL REVIEW PROGRAM

RELEASEESZED

C ilNTRTELl!GENCEC.

sst-^cr ID7^

XL^GRAXSv.'l "OS: Mr. Peter Swiers

Special Assistant toirc-ctor Policy Planning Staff Department oi State

Soviei Actions During tha Recent Oil

Crisis

The attached is in response to your reoeest for information forllarriman or. the way the Soviets ber.avac coring the recent oil crisis. Pies1 on us if ve- ol fjrther ossistsrice.

Director. Economic Research

t: as stated

tt

s eot 7

Soviel: Actions During the Recent Oil Crisis

During the recant oil crisis the USSR performed muchestern oil producing and exporting firm. It tried to maintain deliveries to preferred customers and charged what the market would bear. Some Soviet oil deliveries to Western Europe (primarily Italy, France, and West Germany) wore cut back in order to provide for the needs of Eastern Europe. Also Soviet oil prices to Western customers were quadrupled to conform to world market prices. Nevertheless few, if any, Soviet shipments of oil were diverted from regular Western importers to take advantage of higher spot prices. Soviet deliveries of oil to the US were increased during3 andostlyackhaul associated with the US-USSR grain trade. However, such deliveries were never large.

During the Arab-Israeli conflict tlie USSR was forced to reduce deliveries to Italy to compensate Eastern Europeartial cut-off of Iraqi oil exports. 3 the Soviets did not coraplotely fulfill ctxitractual obligations for delivery of oil to France and West Germany, but the shortfalls were relatively small. The slowdown in oil deliveries probably stemmed from the USSR having to make up for reducedof Kiddle East oil to Eastern Europe during the Arab oil embargo.

4 soroo West European importers have resisted Soviet attempts to charge top dollar for oil in annualtalks. French and West German firms refused toer barrel for Soviet crude oil and, after lengthy negotiations, settled on prices averaging Sller barrel. Finland, which depends on the USSR forf the oil it consunes, has boon particularly unhappy about the high price of soviet oil and thesevere imbalance in its trade with the Soviet Union.esult, the Finns have failed to agreerice for Soviet crude oil during the 2nd half4 althoughare continuing.

Becauseighter domestic oil supply position and an increased need to supply more oil to Easternhe USSR probably will not be able to export to Western Europe4 much, more thanarrels per day delivered With higher oil prices and reduced consunption( West European countries are not seeking more oil. Even if the quantity of Soviet oil sold to Western Europe remains at3 level, Soviot hard currency earnings fron oil exports could iumo2 billion3 to some S3 billion in

Original document.

---

---