Wednesday, June 8, 2011

OPEC Meeting in Shambles as Iran and Venezuela Push Their Agendas


Not a happy camper:
Ali Naimi, Saudi oil minister
Saudi Arabia’s more-or-less stable hand guiding OPEC was yanked from the tiller at the oil producers’ meeting today in Vienna.

For the first time in two decades, OPEC’s stated mission of “ensuring the stabilization of oil markets,” has been replaced by a politicized agenda and the desire by some states (primarily Iran and Venezuela) to increase revenues now, regardless of long-term consequences.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.


  1. Venezuela is unable to increase their oil output due to poor maintenance and crumbling infrastructure; Chavez has a presidential election coming up in 2012 and needs the money to buy votes, so his only hope is rising oil prices.

    Don't know what Iran's motive is.

  2. Its hilarious to see DUHmerican'ts howling about this. You still don't get it. Its not your oil. After treating the entire world as though you own it and bombing it into submission when they refuse you have made your bed and now will have to pay the price.

  3. I hope they bankrupt the whole world economy.Surves the western world right.Bombing everthing flat and expect these people to love you for it. Wake Up and pull your head out of you a$$ and smell the coffee!

  4. What isn't so much known that 18% of the World's oil production is being used just by the US military, to keep the US slaughter machine going.

  5. @bosunj

    Exactly! The only way American foreign policy makes sense is if the US owns the world. Other countries owe us cheap oil, and I've heard people say as much. "Too bad God put OUR oil under THEIR sand!" :)