Bloomberg.com reported yesterday that OPEC members meeting in Vienna this week find themselves on both sides of a military conflict in the Middle East. This has not happened since Saddam Hussein invaded Kuwait in 1990.
The article reports:
“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 article points out that OPEC will probably leave its targeted output of oil unchanged at its current meeting. As oil hovers around $100 a barrel, there are indications that the world economy is slowing down.
The article further reports:
“While the group’s 12 members may not reach a formal agreement to increase quotas this week, “an informal pact to ramp up production, most likely by OPEC’s Gulf members as well as Nigeria, may emerge,” the IEA said in a May report. The agency, which advises oil-importing nations, said in April that “revisiting individual production targets may be difficult now,” amid tensions stoked by the Libyan conflict and a political crisis in the Persian Gulf state of Bahrain.”
Two of the forces currently putting upward pressure on the price of oil are the devaluation of the U. S. dollar and the increasing demand for oil from China.