INTERNATIONAL OIL DEVELOPMENTS - - - THE RELIABILITY OF THE USSR AS AN OIL SUPP

Created: 4/4/1974

OCR scan of the original document, errors are possible

CIA HISTORICAL RBflCW Htf GRA RELEASE IN

THE RELIABILITY OF THE USSR AS AN OIL SUPPLIER

The USSRasically reliable supplier of oil. Despite recent charges in Ihe Western press of undcpendability. the Soviets have not exceeded the normal boundsmart traderommodity tn peai demand.

The press reports accuse Moscow of exploiting the world oil crisis by diverting oil deliveries from regular customers to get higher prices and by raising prices sharply4 contracts. Specific charges have been leviedhortfall ofn oil deliveries to West Germany3hreefold increase in prices for Soviet oil to be delivered4 to West Germany and Finland.

Charges and countercharges by Vcba, the West German importer, and by Soviet trade officials cloud the FRG case. Vcba claims to have received onlyillion tons ofillion agreed to in3 contract. Soviet authoritieshortfall ofons The shortfall probably resulted from Soviet efforts to supply Eastern Europe with oil originally intended for Western Europe; Arab oil deliveries to Eastern Europe were reduced in the wake of the Arab-Israeli conflict. Some

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German sources believe thai Vcba was attempting to tarnish ihc Soviet reputationeliable supplier in an elTorl to induce Moscow lo lower its prices for oil deliveriesithin the pjsl week, however, Vcba (a) agreed loillion tons of Soviet oilnd (b) secured an option for an additional one million tons; lhe price is believed lo be competitive with thai for Middle East oil (abouter barrel delivered).

In the case of Finland, as well as West Germany, the USSR is adapting ils oil sales4 to present world prices, which are three lo four times higher thanoscow is behaving as any smarl trader would in the market, seeing an opportunity lo lake advantage of higher pnees io increase foreign exchange earnings.

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