Riyadh/Rio de Janeiro, Sept. 3 (Reuters): Oil cartel Opec quarrelled openly on Monday ahead of a key policy decision later this month on whether to pump more oil to prevent high crude prices stunting world economic recovery.
Opec kingpin Saudi Arabia said talk of a specific Saudi position was “untrue” after price hawk Venezuela said the kingdom shared its wish to extend current output curbs at the September 19 meeting. Saudi oil minister Ali al-Naimi said in remarks on the state-run Saudi Press Agency that adjustments to Opec’s output ceiling would be made at the meeting to be held in Osaka, Japan, by consensus and after consultations between ministers.
“There seems to be a breakdown in communications in Opec,” said Nauman Barakat of FIMAT International Banque. “It’s possible the Venezuelans are trying to push the Saudis into a position that they don’t want to take,” he added.
The public row harked back to Opec before 1999, when a previously divided cartel reunited around a series of drastic curbs that laid the basis of a three-year price boom. International benchmark Brent crude oil, which has climbed by a third since the start of the year, closed seven cents higher at $ 27.54 per barrel on Monday.
Venezuelan President Hugo Chavez said on Saturday the Latin American country firmly opposed an output increase, and that Saudi Arabia shared that view. His minister reiterated the position on Monday, arguing that current oil prices contained a $ 4-per-barrel premium reflecting war fears in Iraq. Oil-dependent Western economies are pressing the West Asia-dominated group to relax supply quotas, arguing lower prices will help recovery.
After three years of high prices and output curbs, many Opec countries are struggling to contain growing volumes of idle output capacity. The group pumped 9 per cent over its agreed output ceiling in July, the highest level of quota-busting since 1998, when Opec bickering led to an oil price war and financial crisis in exporting countries.