Belfast Telegraph

Thursday 21 August 2014

Oil prices surge as cartel fails to agree on boost in output

Oil prices have surged after cartel Opec failed to back an increase in supplies which could have given some respite to UK motorists squeezed by high forecourt costs.

The 12-member group, which accounts for the production of around 40% of world supplies, had been expected to boost output in an effort to cool oil prices and take some pressure off the world economy.

But the cartel failed to reach agreement at the meeting in Vienna and will resume discussions in three months' time. Crude oil prices fell ahead of the meeting, but later spiked above 100 US dollars a barrel in New York, while Brent crude rose to 118.30 US dollars a barrel.

It is another blow to motorists already reeling from unleaded petrol prices near record levels of around 136p a litre.

The AA motoring organisation said an output increase would have been helpful, but noted that prices had failed to fall back significantly in the wake of an easing in wholesale prices since March.

Saudi Arabia led the call for production to be raised to offset the disruption in Libya and to meet forecasts of rising demand over the rest of the year.

It wanted the cartel to increase official production by about 6% or 1.5 million barrels of oil per day, but other members, most notably Iran and Venezuela, which analysts say are producing at full capacity and could lose out if prices fall, were against any change.

Opec members have had a quota of 24.8 million barrels per day in place since 2009.

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