- Golden Corral coming to Cape; may hire 100 workers (7/21/16)10
- Arrest warrants filed for six drug suspects in Cape (7/19/16)6
- Area groups working together to reintroduce elk in Missouri (7/18/16)1
- Suspect in downtown Cape shooting ID'd in court (7/20/16)2
- Prosecutor says shooting by state trooper was justified (7/24/16)15
- Hastings in Cape closing (7/22/16)5
- Governor signs Rep. Swan bill that equalizes child-custody criteria (7/6/16)5
- City may spend extra park tax money on Cape Splash, skate park, other projects (7/25/16)10
- Jackson's former police dog euthanized Monday (7/21/16)2
- 'I want to see how far I can go' (7/21/16)2
OPEC leaves output increase on hold; price of oil jumps
VIENNA -- OPEC unexpectedly left its production levels unchanged Wednesday, causing oil prices to jump as senior officials said their meeting ended in disarray.
OPEC officials said that because of a policy deadlock, the group will maintain output ceilings with the option of meeting within the next three months to consider an increase.
"We are unable to reach consensus to ... raise our production," OPEC secretary general Abdullah Al-Badri said in comments reflecting unusual tensions in the 12-nation Organization of the Petroleum Exporting Countries.
Saudi oil minister Ali Naimi called it "one of the worst meetings we've ever had," while analysts covering OPEC for more than 20 years said they could not remember any other time that the normally closed group had admitted to such divisions in its ranks.
Some even saw the abortive meeting as a harbinger of demise for the organization, which produces more than a third of the world's petroleum.
"OPEC is ... on the point of breakup," said Marc Ostwald of Monument Securities. "A broader perspective is that the post World War II world order is fracturing in a spectacular fashion, be it the EU/Eurozone, the World Bank/IMF, [or] OPEC."
Other experts were less outspoken but agreed Wednesday's outcome would weaken the image of OPEC as a major regulator of oil markets.
"I think there were some tensions," said Jason Schenker, president of Prestige Economics. "But everyone has to do business and countries have different views on what the future of demand looks like."
The news caught markets by surprise, sending oil prices sharply higher. Benchmark crude for July delivery was up $1.25 to $100.34 per barrel in morning trading on the New York Mercantile Exchange after trading lower ahead of the OPEC meeting.
Saudi Arabia and other influential Gulf nations had pushed to increase production ceilings to calm markets and ease concerns that crude was overpriced for consumer nations struggling with their economies. Those opposed were led by Iran, the second-strongest producer within the Organization of the Petroleum Exporting Countries.
While the Saudis and the Iranians are frequently at loggerheads over pricing, past meetings normally fell in behind Saudi Arabia, which produces the lion's share of OPEC output. But this time, the Saudi-Iranian rivalry combined with major political and economic uncertainties to lead to deadlock.
Among the biggest worries is that unrest in Libya and Yemen could 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 while the Saudis have served notice that they are ready to further increase supplies to help compensate for the loss of the daily 1.6 million barrels normally brought to the market by Libya, other OPEC nations -- already pumping close to capacity -- cannot contribute much. This appeared to have fueled the strong opposition to an output ceiling hike.
Global economic weakness is also worrying producers and consumers.
Poor 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 slump. 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 also risks flooding the market, leading to a surplus that could drive prices below $80 a barrel. That benchmark, which is preferred by the Saudis and other moderate OPEC members, is considered too low by price hawks Iran and Venezuela.
Tuesday's sober assessment of the U.S. economy from Federal Reserve chairman Ben Bernanke added to concerns, especially as the central banker failed to indicate that more monetary stimulus was likely.
"Despite all their efforts, the Saudis were not able to convince Iran and other countries to increase production," said Ehsan Ul-Haq, an analyst with KBC Energy Economics. " It means there is a huge disagreement -- but it also means that it gives the Saudis free space to do what they like."
Going into the meeting, some OPEC nations had signaled that the ministers could opt to raise the output ceiling to actual production levels of around 26 million barrels a day. Add to that the daily 2.7 million barrels produced by Iraq, which is not bound by quotas, and OPEC would have been bringing more than 29 million barrels a day to the market.
The 11 OPEC members are already exceeding their current production quotas. Their output is an estimated 26.15 million barrels daily -- about 1.3 million barrels above the daily overall OPEC production target of 24.85 million barrels a day agreed two years ago.
George Jahn is at http://twitter.com/georgejahn
Noura Maan and Margaret Childs contributed.