OPEC Decides Not To Increase Oil Production
NORRIS: Unrest throughout the Middle East is one reason oil prices have risen sharply. And today, crude prices jumped more than $2 a barrel after an OPEC meeting in Vienna.
As NPR's Jeff Brady reports, members of the cartel simply couldn't agree on whether or not to boost production.
JEFF BRADY: Recovering economies around the world could use a break from high oil prices. And going into today's OPEC meeting in Vienna, oil market analysts assumed there would be agreement to increase production and bring prices down a bit. So when ministers emerged from behind closed doors and announced they could not reach agreement, oil prices rose sharply.
OPEC Secretary-General Abdalla El-Badri, speaking to reporters after the meeting, sought to calm fears about supply.
Mr. ABDALLA EL-BADRI (Secretary-General, OPEC): We have enough stocks. The stock is about two and a half or three days of our five-year average. We have, you know, enough supply in the market. There is no shortage whatsoever.
BRADY: Iran's acting Minister of Petroleum, Mohammad Aliabadi, was asked why negotiations broke down. Aliabadi is also president of this OPEC conference. Speaking through an interpreter, he said it takes more than a simple majority to decide production quotas.
Minister MOHAMMAD ALIABADI (Ministry of Petroleum, Iran): But in OPEC, once you have the consensus, so on any issue, this might create, you know, similar problem - problem that we have today, for example.
BRADY: Saudi Arabia's oil minister was more blunt. After the meeting, Ali Naimi he called this though worst OPEC meeting ever. His country lobbied for the production increase to bring oil prices down.
Leaving aside that OPEC members almost never comply with production quotas, it can be confusing to understand why one OPEC member country wants prices higher and the other wants them lower. But academics who've watched OPEC for many years say the same old dynamics are still at play.
Professor ROBERT KAUFMAN (Center for Energy & Environmental Studies, Boston University): This goes back a long way between price doves and price hawks in OPEC.
BRADY: Robert Kaufman monitors OPEC from his post at Boston University. He says on the dove side are the relatively wealthy oil-producing countries, like Saudi Arabia. Their preference is for stable, long-term prices, somewhere above $80 a barrel. If prices rise too high, they start to worry that will reduce demand in oil consuming countries like the U.S.
On the hawk side of the price debate, says Kaufman, are the less wealthy oil-producing country like Iran and Iraq.
Prof. KAUFMAN: And they have lesser amounts of oil and relatively more people and a lower standard of living. And their big concern was they wanted revenues and they wanted revenues now.
BRADY: That traditional position likely is even more pressing with the current unrest in the Middle East.
So what does all this mean for those of us who drive? In recent weeks, oil prices have dropped about $15 a barrel. Philip Verleger monitors oil markets and is a professor at the University of Calgary.
Professor PHILIP VERLEGER (Economics, University of Calgary): The news today is not good for consumers. If we want lower prices, we need to tap strategic petroleum reserves.
BRADY: White House spokesman Jay Carney said today that President Barack Obama is keeping that option open, but no decision has been made yet. That's something the U.S. oil industry would oppose. As oil prices started rising in New York trading today, the value of oil company stocks began going up, too.
Jeff Brady, NPR News.
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