Opec oil talks collapse

Opec talks broke down in acrimony on Wednesday without an agreement to raise oil output after Saudi Arabia failed to convince the cartel to lift production. "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.
Naimi said Opec''s four Gulf Arab countries proposed the 12-member group increase output by 1.5 million barrels a day to 30.3 million barrels a day, including Iraq which is not bound by an Opec quota. Seven - Libya, Algeria, Angola, Ecuador, Venezuela, Iraq and Iran - were opposed, he said, wanting to keep production unchanged.
Asked why he did not support an increase Ecuador''s Oil Minister Wilson Pastor said: "We do not know what will happen with demand in the next few months." The failure to do a deal will be a blow for industrialised consumer countries hoping Opec would take action to stem fuel inflation. Brent crude rose more than $1 a barrel to above $118.
POLITICAL BACKDROP Analysts said that while there were opposing opinions on whether markets required more crude, the backdrop to the disagreement appeared to revolve around political tensions in the Middle East and North Africa. "One factor is a diverging market view. Another is politics," said analyst Samuel Ciszuk at IHS. "At times of heated politics/ideological debate, Saudi struggled to dominate as much as it could have given its size vis-a-vis others in Opec.
Gulf Arab producer Qatar has given support to Libyan rebels fighting the government of Libya''s Mummar Gaddafi. And Saudi Arabia has angered Shia Iran by using force to support the Sunni Bahraini government in suppressing a Shia rebellion. Opec Secretary-General El-Badri said the effective decision was no change in policy but that he hoped Opec would meet again in three months time. Naimi said the next meeting would be on December 14. Saudi, the only country with significant spare capacity, will now raise output unilaterally. Earlier in the week a Gulf official said Saudi was already raising output by at least 500,000 bpd in June to 9.5-9.7 million bpd.
Saudi output was last as high in the middle of 2008 after oil prices set a record $147 a barrel, shortly before recession sent prices crashing. Forecasts suggest more oil is required to stop oil prices rising again. Opec''s Vienna secretariat sees demand in the second half of the year 1.7 million bpd higher than current cartel output.