Tess Vigeland: The price of crude jumped by more than $2 a barrel today. A key meeting of the Oil Producers’ Cartel — OPEC — failed to find agreement on an increase in production. The meeting in Vienna was a contentious one — and that’s putting it mildly.
Now, just weeks after a consumer pullback that prompted gas prices to drop, there are fears of another sharp rise in the price of oil. Which would not bode well for any kind of global economic recovery. From the European Desk in London, Stephen Beard reports.
Stephen Beard: By all accounts, today’s OPEC meeting was poisonous. Libya is furious at Qatar because it’s backed the rebellion against Colonel Gaddafi.
But there’s an even more fundamental divide in the cartel. Between those countries like Saudi Arabia with big reserves that want a stable price for their oil, and those like Iran, Libya and Venezuela who have little spare capacity. Samuel Ciszuk is an oil analyst with IHS Global Insight.
Samuel Ciszuk: Those who are starting to see the end of their reserves are obviously interested in maximizing the amount of money they will get out of it.
That group of countries today refused to back Saudi Arabia’s call to pump more oil and restrain prices, hence the jump in the price of crude. But the Saudis hinted that they may step up production anyway. Chris Skrebowski of Peak Oil Consulting says this could herald the end of OPEC.
Chris Skrebowski: I think it’s probably a 60 or 70 percent chance that this will fundamentally change the cartel. That in practical terms, it will split.
With Saudi Arabia pumping more oil and with OPEC in disarray, that would seem to be good news for beleaguered oil consumers. But as Professor Kent Moors of Duquesne University told the Marketplace Morning Report, don’t bet on it.
Kent Moors: Well, gas prices probably have gone down as much as they’re going down nationally. We’re not going back anywhere close to $3.30 or thereabouts.
Such is the rapid growth in demand for oil — in China, India and elsewhere — the price seems headed inexorably higher.
In London, I’m Stephen Beard for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.