Opec unexpectedly decided to leave its production levels unchanged today after a key meeting ended in disarray.
Officials said the lack of agreement meant that Opec will maintain present output ceilings with the option of meeting within the next three months for a possible production hike.
“We are unable to reach consensus to ... raise our production,” Opec Secretary General Abdullah Al-Badri said, in comments reflecting unusual tensions in the 12-nation Organisation of the Petroleum Exporting Countries.
Analysts covering Opec for more than 20 years said they could not remember any other time that the normally closed group had admitted to such divisions in its ranks.
Oil prices surged on the news.
Saudi Arabia and other influential Gulf nations had pushed to increase production ceilings to calm markets and ease concerns that crude was overpriced for consumer nations struggling with their economies. Those opposed were led by Iran, the second-strongest producer within the Organisation of the Petroleum Exporting Countries.
While the Saudis and the Iranians are frequently at loggerheads over pricing, past meetings normally fell in behind Saudi Arabia, which produces the lion’s share of Opec output. But this time, the Saudi-Iranian rivalry combined with major political and economic uncertainties to lead to deadlock.
Among the biggest worries is that unrest in Libya and Yemen could destabilise larger oil-producing nations in the region. The two countries normally produce less than 4% of the world’s oil needs, and Saudi Arabia and others have boosted output to make up for much of the shortfall.
But while the Saudis have served notice that they are ready to further increase supplies to help compensate for the loss of the daily 1.6 million barrels normally brought to the market by Libya, other Opec nations – already pumping close to capacity – cannot contribute much. This appeared to have fuelled the strong opposition to an output ceiling hike.