Oil prices spiked higher after reports that Opec producers decided to keep production unchanged as talks broke down at today’s OPEC meeting in Vienna.
Saudi Arabia and three other countries proposed raising output by 1.5 million barrels a day, less than the amount OPEC itself said in a May report would be needed to meet higher demand as the summer driving season arrives.
However, they failed to convince others to raise output to ease fuel inflation in struggling Western economies.
“We were unable to reach an agreement — this is one of the worst meetings we have ever had,” said Ali al-Naimi, oil minister for Saudi Arabia, OPEC’s biggest producer.
The failure to do a deal is a blow for consumer countries hoping the Organization of the Petroleum Exporting Countries would take action to stem fuel inflation. He added suggestions that the producing group needed to wait another three months before deciding on an output increase was not a good idea because markets needed oil now, effectively signaling that the Saudis could start pumping more crude soon.
Uprisings in Libya and Yemen have created jitters about OPEC’s ability to pump enough oil. The economic downturn has added to uncertainties, with consuming countries saying present prices of benchmark crude around $100 a barrel are unaffordable in the long run.
Some OPEC members have said the international energy markets are well-supplied with oil, and blame high prices on “speculation” rather than tight supplies.
Nymex crude is now up nearly 2%, back above $100 a barrel, and Brent crude is up to $118. Both were down ahead of the OPEC news.
On the same time, OPEC ministers confirmed that Libya production is adding nothing at present time to world inventories.