Oil leaps after Opec fails to strike deal

Oil prices jumped sharply on Wednesday as a meeting of oil ministers from the producers’ cartel broke up in acrimony after failing to reach any consensus on changing production policy.

An attempt by Saudi Arabia to raise quotas was blocked by other member countries, notably Iran and Venezuela. The gathering in Vienna ended after less than five hours with a perfunctory endorsement of the cartel’s existing – and widely flouted – production limits.

The news sent Brent crude up more than $2 to a one-month high of $118.58 a barrel. West Texas Intermediate, the US benchmark, moved back above $100 a barrel.

Ali Naimi, the Saudi oil minister and de facto leader of Opec, said it had been “one of the worst meetings we have ever had”.

Abdalla El-Badri, Opec secretary general, announced that “unfortunately we are unable to reach a consensus this time to reduce or raise our production”. Mr Badri, visibly dejected, said failure to reach agreement among the 12 member states was because of discrepancies in their official data about oil demand and supply.

“Everyone has his own data and information,” said Mr Badri. “Some of them, they have different numbers . . . we are unable to consolidate our numbers together so we can agree to increase or reduce our production.”

Data produced by Opec’s own secretariat suggest that the call on the club’s crude oil production will rise by 2.1m barrels a day between the second and third quarters, as refineries come back on line after routine maintenance. But some of Opec’s own members appeared not to accept the organisation’s forecast.

Mr Badri denied that Opec’s failure to reach a decision would cause a crisis on the oil market. “We have enough stocks, we have enough supply in the market. There is no shortage,” he said.

Perhaps the most important development on the oil market this year has been the loss of Libyan production, which totalled 1.58m b/d in January. But Mr Badri, a former deputy prime minister in Colonel Muammer Gaddafi’s regime, said the meeting had not considered this matter. “We did not discuss Libya’s situation,” he said.

Mohammed Aliabadi, Iran’s acting oil minister, chaired the meeting. He said the only decision was that ministers would meet again in December to reassess the market. Alluding to the bitter divisions within the cartel, particularly between Iran and Saudi Arabia, Mr Aliabadi added: “But this decision was unfortunately not welcomed by certain members.”

Mr Naimi said the Gulf Co-operation Council countries had suggested a total Opec ceiling of 30.3m barrels a day, based on expectations of demand for the second half of the year, but six countries did not agree.

Mr Naimi added that Saudi Arabia would supply the oil market with whatever it needed

Consumer countries have put pressure on the oil producers’ group to raise output after oil prices rose more than 20 per cent since the start of the year. The International Energy Agency, the western countries’ oil watchdog, has said there is a “clear, urgent need for additional supplies” from Opec.

Opec’s present constraints bind its 11 members – Iraq is still exempt – to produce no more than 24.85m b/d. In practice, the countries in the quota system pumped 26.15m b/d in April, according to the IEA.

Speaking ahead of the official start of the meeting, Rafael Ramírez, Venezuela’s oil minister, described any change in production policy as unnecessary, while Mr Aliabadi said the market remained “well supplied”.