Saudi Arabia’s more-or-less stable hand guiding OPEC was yanked from the tiller at the oil producers’ meeting today in Vienna.
For the first time in two decades, OPEC’s stated mission of “ensuring the stabilization of oil markets,” has been replaced by a politicized agenda and the desire by some states (primarily Iran and Venezuela) to increase revenues now, regardless of long-term consequences. The schism comes at a bad time for the still-fragile (and still-oil-addicted) global economy.
The standoff in Vienna that left oil production levels unchanged translates into higher oil prices — Iran’s and Venezuela’s poke-in-the-eye of the U.S. and Saudi Arabia.
Outsiders were surprised by events at what the Saudi Oil minister Ali Naimi proclaimed “one of the worst meetings we have ever had.” But, even OPEC itself seemed to be caught off guard. On June 3rd, the organization issued stinging rebuke that placed responsibility for market volatility squarely on the shoulders of oil speculators.