OPEC clashes over quotas
FEARS the global economy could be damaged by surging oil prices mounted yesterday after some of the world’s largest oil producers failed to reach a deal on increasing output.
The price of Brent crude surged by nearly $2 a barrel to $118.58 after a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) broke up without agreement being reached. However, gains were limited by hopes Saudi Arabia would lift production unilaterally ahead of a spike in global demand expected later this year. “This is one of the worst meetings we have ever had,” said the country’s oil minister Ali al-Naimi. Saudi Arabia has already increased production beyond quotas set by OPEC.
“It will be important to see if the Saudis are willing to supply more, it will matter a lot,” said Barclays Capital analyst Amrita Sen. “Otherwise the market will be very tight.” BP chief economist Christof Ruhl warned one of the threats was oil-fuelled inflation combined with rising interest rates. He said the combination had proved “toxic” in the past.