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OPEC turmoil gives oil price a boost

Thursday, June 09, 2011 - 02:26

June 8 - Oil prices jumped sharply after Saudi Arabia failed to convince other OPEC members to boost production, in a sign a deepening rift could threaten the oil cartel's credibility. Conway G. Gittens reports.

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PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL Following acrimonious talks at an OPEC meeting in Vienna, which broke down with no agreement on production quotas, the group's Secretary General, Abdulla El-Badri, attempts to play down the divide, saying its hard to tell right now where demand is heading. SOUNDBITE: OPEC SECRETARY GENERAL ABDULLA EL-BADRI (ENGLISH) SAYING: "Uncertainty is the world growth, GDP growth -- that was a real, there was a debate about this point because of the inflation, because of the unemployment, because of the sovereign debts, because of the manufacturing declining, so there is a lot of uncertainty." But the debate reveals a rift in the 12-nation Organization of Petroleum Exporting Countries. The talks ended so badly Saudi Arabia's oil minister described them as "one of the worst meetings we have ever had." Ray Carbone of Paramount Options says OPEC is a mess. SOUNDBITE: RAY CARBONE, PRESIDENT, PARAMOUNT OPTIONS (ENGLISH) SAYING: "OPEC can be in disarray at this moment but the Saudis and the Kuwaitis and the UAE taking the position of really the western developed nations needing an oil price that does not curtail demand over the long run and this is going to be a battle, that I don't anticipate dissipating anytime soon." In the other camp: Iran, its sympathizers, and Middle East nations near the epi-center of the Arab Spring uprising, who want to keep prices high for political reasons. SOUNDBITE: RAY CARBONE, PRESIDENT, PARAMOUNT OPTIONS (ENGLISH) SAYING: "We've always had those camps within OPEC but now given the disarray within the region, the strong rift between Iran and Saudi Arabia - it's going to be a rocky road for OPEC and who is going to control it." That struggle was taken as a "buy" signal at the New York Mercantile Exchange, where oil jumped as high as roughly $102, as traders bet demand will outstrip supply and keep global oil prices above $100. But the lack of a deal puts OPEC's credibility on the line, analysts say. Many of the nations who voted not to boost production can't, and are already cheating, while the Saudis signaled they will increase output, no matter what the rest of OPEC decides. Conway Gittens, Reuters

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OPEC turmoil gives oil price a boost

Thursday, June 09, 2011 - 02:26