OPEC Upstaged by Qaddafi in Most-Hostile Meeting Since Gulf War

AYESHA DAYA | JUNE 2011 | SOURCE: Bloomberg

OPEC ministers meeting in Vienna this week may find themselves supporting opposing camps of a military conflict for the first time in 21 years, with hostilities in Libya complicating an agreement on oil quotas.

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.

OPEC Upstaged by Qaddafi in Most-Hostile Meeting Since Gulf War

The conflict underlines the difficulties the 50-year-old organization that 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.”

Iran’s Acting Minister

Iran, OPEC’s second-largest producer, will most likely be represented by Mohammad Aliabadi, who was appointed as acting oil minister, state-run Press TV said on June 2. Ahmadinejad sacked the oil minister in a cabinet reshuffle and appointed himself as the ministry’s caretaker. The move was criticized by local industry experts and described on May 20 as “unlawful” by the Guardian Council, Iran’s top legal authority.

Iran holds the group’s presidency for the first time since 1975, when Venezuelan terrorist Ilich Ramirez Sanchez, better known as Carlos the Jackal, kidnapped OPEC officials in the secretariat building in Vienna and threatened to kill the Iranian and Saudi oil ministers.

“The meetings are not political -- they are business meetings to look at the oil market,” said Manouchehr Takin, an analyst at the Centre for Global Energy Studies in London. Takin worked at the OPEC Secretariat while Iran and Iraq were at war from 1980 to 1988.

“During the war, ministers may not have been cordial, but they were professional,” Takin said. “They may not have talked to each other during the breaks, but they shook hands at least.”

Related article: OPEC considers increase in oil output

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