Indonesian Unfreeze

As Arab nations increase their oil output, most economists expect the world price of crude to drop; and, indeed, last month the major oil-exporting nations appeared to recognize that the dizzying upward price spiral had ended. At a meeting in Vienna, they pledged to hold the line at $10.80 per bbl. until June 30. Last week, however, Indonesia surprisingly lifted its price to $11.70, thus violating the freeze agreement.

Why? Business News, a Jakarta paper, editorialized: "It is proper for us to determine our oil-price policy based on our own interest." That interest swiftly became clear when the Japanese, who buy about 80% of Indonesia's exports of 1 million bbl. per day, agreed to the boost. The U.S., which imports 17% of Indonesia's output, has no choice but to pay up too--and hope that the logic of supply and demand will prevail when the other petroleum exporters review prices July 1.

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