The Organization of the Petroleum Exporting Countries (OPEC) met in Vienna today amid heightened political tensions between the members, resulting in a breakdown in talks and no agreement to increase production, causing oil prices to jump.
One of OPEC’s largest oil producer, Saudi Arabia, failed to convince the other members to raise output.
“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.
Recently we have seen poor economic data from one of the world’s largest economies, the U.S. As prolonged period of high energy prices could damage economic recovery. OPEC which holds most of the current global spare capacity of oil must therefore tread a fine line between optimizing their revenues without affecting economic growth.
Saudi Arabia was hoping to push through a deal to raise output levels at the OPEC meeting, having also been pressured by the United States.
As one of OPEC’s biggest producer, Saudi Arabia normally gets its way, but was defeated this time since other OPEC members who are politically opposed to the United States — in particular Iran and Venezuela — found enough support to block the Saudi’s proposal.
Analysts said that while there were opposing views on whether markets required more crude, the main issue to the disagreement revolved around political tensions in the Middle East and North Africa.
After the news, crude oil prices rose over $3 a barrel to $101.86 from $98.43.
Brent crude rose to $118.08.