OPEC declines to raise output; prices up

Associated Press

NEW YORK

A contentious meeting of oil ministers ended Wednesday with a clear message: Don’t count on OPEC to do much about oil prices.

The 12-nation group decided not to boost production, which likely would have resulted in lower prices. That sent oil back above $100 a barrel. And more importantly, it sets the stage for higher prices later this year.

Rising energy prices since the beginning of the year have impacted the U.S. economic recovery. The Federal Reserve on Wednesday reported that the economy slowed in several parts of the country this spring and blamed high gas prices for sluggish consumer spending.

At Wednesday’s OPEC meeting in Vienna, Saudi Arabia lobbied for an increase in oil output, which likely would have lowered oil prices. Countries such as Iran resisted, arguing that oil supplies are adequate to meet demand and current prices are appropriate.

“We are unable to reach consensus,” OPEC Secretary General Abdullah Al-Badri told reporters after the meeting in Vienna ended. Saudi oil minister Ali Naimi called the meeting “one of the worst ever.”

Traders were surprised, and oil prices climbed. Benchmark West Texas Intermediate for July delivery gained $1.65 to settle at $100.74 per barrel on the New York Mercantile Exchange. In London, Brent crude added $1.07 to settle at $117.85 per barrel on the ICE Futures exchange.

Many analysts almost were certain that OPEC would increase production. OPEC not only supplies 34 percent of the world’s oil — about 29.7 million barrels per day — it has the unique ability to crank up production as needed. Other oil-producing countries, such as Canada, Russia and Mexico, don’t have that flexibility.