Oil surges as OPEC fails to agree on output hike
08 June 2011
Oil prices jumped by up to $2 a barrel, with futures surging above $100 a barrel, after the Organisation of Petroleum Exporting Countries (OPEC) today failed to reach a deal to increase output, and announced that quotas would remain unchanged, giving rise to fears of supply shortages later this year and a price rally that could damage global economic recovery.
The decision came as a surprise for the oil market, which had widely expected the cartel to boost its output ceiling. Gulf states led by Saudi Arabia, the world's top exporter, had been pushing a plan to raise quotas by 1 million to 1.5 million barrels a day in response to triple-digit oil prices and the loss of Libyan exports.
Light, sweet crude for July delivery rose $1.56, or 1.6 per cent, to $100.65 a barrel on the New York Mercantile Exchange, after spending the morning in negative territory.
Brent crude on the ICE futures exchange advanced $1.26, or 1.1 per cent, to $118.04 a barrel.
OPEC talks broke down without an agreement to raise output after Saudi Arabia failed to convince other members to lift production.
"We were unable to reach an agreement - this is one of the worst meetings we have ever had," Saudi oil minister Ali al-Naimi said.
OPEC secretary general Abdullah El-Badri said the effective decision was no change in policy and that OPEC hoped to meet again in three months' time.