Oil price rises sharply after Opec meeting collapses in disarray

• Proposal to increase production rejected by 6 of 12 members • Analysts foresee Opec’s power base weakening Oil prices have jumped by more than $1 a barrel after a meeting of Opec collapsed in acrimony without a deal to aid the struggling world economy by pumping more crude. Saudi oil minister Ali al-Naimi called the gathering “one of the worst meetings we have ever had,” after the Saudis’ proposal to increase production quotas by about 1.5m barrels a day was blocked by six of the group’s 12 members, including Iraq and Venezuela. Several countries argued that they are using their tax revenues to cushion their populations against the rocketing cost of other commodities such as food and cannot afford for oil prices to fall. Opec is not due to meet again for another three months, and some analysts said the angry divergence of views could mark the beginning of the end for the cartel. “A new world order beckons, doubtless preceded by disorder,” said Marc Ostwald, strategist at Monument Securities. He predicted that non-Opec members such as Russia and Kazakhstan could be the main beneficiaries if the cartel’s power wanes. Production quotas have now remained unchanged since 2009. The International Energy Agency, the global energy watchdog, expressed its “disappointment” at Opec’s decision and urged producers to increase output anyway. “Ongoing supply disruptions, as well as the fragile state of the global economy, call for a prompt increase in supply on a competitive basis that will allow refiners to boost throughputs and meet rising seasonal demand,” it said, adding: “Otherwise, a further tightening in the market and potential increases in prices risk undermining economic recovery, which is in the interests neither of producers or consumers.” However, Julian Jessop, chief international economist at Capital Economics, said the weakening outlook for the global economy should bring oil prices down later this year: “We continue to expect the price of Brent crude to drop back below $90 per barrel by the end of the year, as global demand continues to disappoint, the Middle East risk premium fades, and the dollar rebounds.” Oil Commodities Heather Stewart guardian.co.uk

Posted by on June 8, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.