Sign in to comment!

Menu
Home

The Mideast

OPEC Split on Increasing Oil Production Amid Turmoil

VIENNA -- The Mideast turmoil, a faltering world economy and divisions on whether to raise crude output promise to make this week's OPEC meeting one of the more volatile in recent history.

In the end, the 12-nation group will probably opt to increase production levels to reduce international concerns about the high price of oil. But some influential members are looking to raise the cost of crude.

Iraqi oil minister Abdul-Karim Elaibi told reporters Tuesday that a price of between $100 and $120 a barrel is "reasonable." That is at or above present prices and is considered too high by major oil-consuming countries struggling with their economies. And it goes against efforts by OPEC kingpin Saudi Arabia to push prices downward.

OPEC oil ministers usually face easier choices at the regular meetings, where they seek agreement on how much to pump and sell to the rest of the world. But the mixed signals ahead of Wednesday's meeting are making decisions difficult.

The unrest in Libya and Yemen threatens to destabilize larger oil-producing nations in the region. The two countries normally produce less than 4 percent of the world's oil needs, and Saudi Arabia and others have boosted output to make up for much of the shortfall. But worries that the violence could spread to bigger producers and seriously cut into world output has caused jitters, both from crude exporting nations and from the U.S., China and other consumers with huge energy needs.

The shaky state of the global economy is another wild card in this week's talks.

Weak housing and employment reports from the United States added to the gloom spread by Europe's attempts to bail out governments and Japan's post-Fukushima meltdown. At its present price of around $100 a barrel, benchmark crude may be too expensive for nations struggling to make ends meet, worsening the economic picture and leading to less oil demand.

But with sputtering economies using less energy, raising output to lower prices could also flood the market, leaving to a surplus that could drive prices below $80 a barrel. Even that benchmark, which is preferred by the Saudis and other moderate OPEC members is considered too low by price hawks Iran and Venezuela.