"We were unable to reach an agreement — this is one of
the worst meetings we have ever had," said Ali Al-Naimi, Saudi minister of
petroleum and mineral resources.
The failure to do a deal is a blow for consumer countries
hoping the Organization of the Petroleum Exporting Countries would take action
to stem fuel inflation.
Brent crude rose $1.42 a barrel to $118.20.
"We have noted with disappointment that OPEC members
today were unable to agree on the need to make more oil available to the
market," said the West's energy adviser the International Energy Agency.
Al-Naimi said OPEC's four Gulf Arab countries proposed the
12-member group increase output by 1.5 million barrels a day to 30.3 million
barrels a day, including Iraq which is not bound by an OPEC quota.
But they were left isolated by a majority of seven — Libya,
Algeria, Angola, Ecuador, Venezuela, Iraq and Iran — who wanted to keep
production unchanged. Nigeria's position was not known.
Iran said the view of the majority was that supplies were
adequate for the time being and that it had proposed delaying a decision on
more oil by two or three months.
"Iran believes there is no shortage of supply,"
acting Oil minister Mohammad Aliabadi told Reuters. "There is no request
that we cannot meet, therefore there was no need to raise output and that was
the opinion of many other OPEC members."
Analysts said that while there were opposing views on
whether markets required more crude, the backdrop to the disagreement revolved
around political tensions in the Middle East and North Africa and differences
over how to respond to consumer demands. "One factor is a diverging market
view. Another is politics," said analyst Samuel Ciszuk at IHS.
OPEC's own forecasts suggest more oil is required to stop
oil prices rising again. OPEC's Vienna secretariat sees demand in the second
half of the year 1.7 million bpd higher than current group output — in line
with Saudi Arabia's proposals.
"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," a statement from the IEA said.
