OPEC talks broke down in acrimony on Wednesday without an agreement to raise oil output after Saudi Arabia failed to convince the cartel to lift production.
“We were unable to reach an agreement – this is one of the worst meetings we have ever had,” said Saudi Arabia’s Oil Minister Ali al-Naimi. He said OPEC’s four Gulf Arab countries proposed that the 12-member group increase output by 1.5 million barrels per day (bpd) to 30.3 million bpd.
Seven members – Libya, Algeria, Angola, Ecuador, Venezuela, Iraq and Iran – were opposed to the idea, he said, wanting to keep production unchanged. When asked why he did not support an increase, Ecuador’s Oil Minister Wilson Pastor said, “We do not know what will happen with demand in the next few months.”
The failure to do a deal will be a blow for industrialised consumer countries hoping OPEC would take action to stem fuel inflation.
Analysts said that while there were opposing opinions on whether markets required more crude, the backdrop to the disagreement appeared to revolve around political tensions in the Middle East and North Africa. “One factor is a diverging market view. Another is politics,” said IHS analyst Samuel Ciszuk.
Gulf Arab producer Qatar has given support to Libyan rebels fighting the government of Libya’s Mummar Gaddafi.
And Saudi Arabia has angered Shi’ite Iran by using force to support the Sunni Bahraini government in suppressing a Shi’ite rebellion. OPEC Secretary-General El-Badri said the effective decision was no change in policy, but that he hoped OPEC would meet again in three months time.
According to Naimi the next meeting would be on December 14. Saudi Arabia, the only country with significant spare capacity, is expected to raise output unilaterally.Earlier in the week a Gulf official said Saudi Aravia was already raising output by at least 500,000 bpd in June to 9.5-9.7 million bpd.
The last time Saudi output was this high was in the middle of 2008 after oil prices set a record $147 a barrel, shortly before recession sent prices crashing. OPEC’s Vienna secretariat sees demand in the second half of the year at 1.7 million bpd which is higher than current cartel output.