|Not a happy camper: |
Ali Naimi, Saudi oil minister
For the first time in two decades, OPEC’s stated mission of “ensuring the stabilization of oil markets,” has been replaced by a politicized agenda and the desire by some states (primarily Iran and Venezuela) to increase revenues now, regardless of long-term consequences. The schism comes at a bad time for the still-fragile (and still-oil-addicted) global economy.
The standoff in Vienna that left oil production levels unchanged translates into higher oil prices — Iran’s and Venezuela’s poke-in-the-eye of the U.S. and Saudi Arabia.
Outsiders were surprised by events at what the Saudi Oil minister Ali Naimi proclaimed “one of the worst meetings we have ever had.” But, even OPEC itself seemed to be caught off guard. On June 3rd, the organization issued stinging rebuke that placed responsibility for market volatility squarely on the shoulders of oil speculators.
While, of course, the financial sector has an important role to play in the trading of oil, the matter has got completely out of hand in recent years…”They have a point, of course. But, clearly, the biggest factor behind volatility now is a division within OPEC, with no evidence that the split will heal any time soon.
Here’s the International Energy Agency’s official reaction to today’s meeting:
We have noted with disappointment that OPEC members today were unable to agree on the need to make more oil available to the market. Of course what really matters is actual supply, which should move in line with seasonally rising demand, and we urge key producers to respond accordingly. Ongoing supply disruptions, as well as the fragile state of global economy, call for a prompt increase in supply on a competitive basis that will allow refiners to boost throughputs and meet rising seasonal demand. Otherwise, a further tightening in the market and potential increases in prices risk undermining economic recovery, which is in the interests neither of producers or consumers. The IEA stands ready to work with its member governments and others to help ensure that markets are well supplied.