June 2011 | Lindsay Clark
failure of the Organization of the PetroleumExporting Countries (Opec) to reach
agreement on oil production is contributing to speculation that the cartel
could break up.
a statement to mark the end of the 159th Opec Conference in Vienna, the organisation
announced it had not reached a production agreement, despite persistently high
and rising global oil prices. However, it said it would still strive to
stabilise prices. “The organisation abides by its longstanding commitment to
order and stability in the international oil market,” it said.
strategic and local economic priorities could eventually lead to the break up
of the cartel, said John Kennedy, lead analyst at commodity research firm
EnergyQuote JHA. “Although it's perhaps too early to say whether we are
witnessing the end of Opec, the failure of the Saudi
request does expose the different economic perspectives of members,” he said. “The
Saudis are cognisant of the impact the 70s oil crisis had on the world economy
and are keen to avoid a repeat situation.”
Arab state wanted to avoid high prices destroying demand because if customers
couldn’t afford it, it would result in a loss of business for oil producers. Kennedy
said: “Iran is focusing more on the short-term. It needs oil prices to remain
at present levels, to enable them to earn sufficient revenue to finance
subsidies designed to counter the effects of high inflation.
Saudi Arabia has two thirds of Opec's spare capacity, whether prices will
continue on their upward trajectory depends on the extent which Saudi Arabia
increases production to keep pace with global oil demand,” Kennedy said.
was possible that Saudi Arabia would act unilaterally to increase production,
before the cartel reached agreement, he said.
160th meeting is expected to take place on 14 December 2011 in Vienna.