Ayesha Daya
Bloomberg
6/6/2011
OPEC’s decision on production quotas this week may be complicated by hostilities in Libya as members meeting in Vienna find themselves supporting opposing camps of a military conflict for the first time in 21 years.
Not since Saddam Hussein invaded Kuwait in 1990 has the producer group gathered with some nations giving financial and military support to a movement seeking to topple the government of a fellow member. While Libyan leader Muammar Qaddafi is trying to quash a rebellion in a country that holds Africa’s largest crude reserves, Qatar, Kuwait and the United Arab Emirates are backing the insurgents.
The conflict underlines the difficulties the 50-year-old organization, which accounts for about 40 percent of the world’s oil, may have in deciding production levels. Oil has gained 9.5 percent this year to trade at about $100 a barrel amid signs that the pace of the global economic recovery may be slowing. The Organization of Petroleum Exporting Countries will probably leave its output target unchanged on June 8, according to a Bloomberg survey of 30 analysts conducted May 24-31.
“Amid issues surrounding representation of Libya and oil prices correcting towards $100 a barrel, OPEC is likely to sit on the fence, deferring a decision on quotas for later,” Harry Tchilinguirian, the head of commodity-markets strategy at BNP Paribas SA in London, said in an interview on June 1. “This does not mean individual countries may not take discretionary steps to increase output. OPEC has yet to fill the gap in the market left by Libya.”
The article continues at Bloomberg.com
