VIENNA // The price of oil soared close to US$120 a barrel yesterday as Opec failed to reach agreement on production targets during a six-hour meeting described by the Saudi delegate as "one of the worst" ever.
The 12-nation group gathered behind closed doors at Opec's headquarters in Vienna while oil traders held their breath.
Earlier in the day it had been suggested the crude producers were close to agreement on a plan to increase production targets and to exclude Libya, which has halted production in the wake of its civil war, from the Opec quota system.
The delegates emerged from their meeting an hour earlier than expected, however, stunning oil markets with their failure to agree.
"We were unable to reach an agreement Ö this is one of the worst meetings we have ever had," the Saudi Arabian oil minister Ali al Naimi said, adding that his country - the world's largest oil exporter - was committed to keeping the market well supplied.
The UAE, Kuwait and Qatar, he said, had joined Saudi Arabia in supporting an increase in production quotas of 1.5 million barrels per day (bpd) over Opec's 28.8 million current daily production.
Libya also sparked intrigue as Muammar Qaddafi unexpectedly sent a delegate to the meeting, stymying plans by Libyan rebels to attend. Libya then joined Algeria, Angola, Ecuador, Venezuela, Iraq and Iran to oppose lifting quotas.
"Unfortunately at this time we are unable to reach any consensus," said Abdalla el Badri, the secretary general of the organisation that controls about 40 per cent of crude oil supply.
The International Energy Agency said it was disappointed with Opec's failure and called for "a prompt increase in supply".
The Paris-based group of energy-consuming nations added that any "potential increases in prices" caused by Opec's failure "risk undermining economic recovery".
Brent crude, the European benchmark, immediately shot up by more than $1 a barrel in late trading in London, hitting $118.58.
That widened the already yawning gap between Brent and the US benchmark West Texas Intermediate crude, which had slipped below $99 this week. The US crude climbed back above $100 early in yesterday's trading session on the New York Mercantile Exchange.
In the absence of a decision to raise the group's official output ceiling, which is some 1.4 million bpd lower than actual production in recent months, Opec will again leave unchanged the target that it set in December 2008, after crude had slid by about 80 per cent from the record $147 per barrel reached the previous July.
In what some analysts see as a reprise of the situation prevailing in the first half of 2008, crude has climbed steeply over the past eight months, with Brent averaging about $109 this year.
"Certain members believed that we should have had a production increase today. Others believed we should have some time to further assess the situation and then come to a decision," said Mohammad Aliabadi, the Opec president.
"The final proposal was that at the most we can wait for about three months during which we will assess the market situation, assess the demand and decide after that." he said.
But even on that modest proposal, the group could not reach agreement yesterday.
"I hope that in the period of three months at the latest we will be able to hold an extraordinary meeting to be able to come to a decision," said Mr Aliabadi, who only last week was appointed the caretaker oil minister of Iran.
Despite the lack of consensus, Opec took the unprecedented step of emphasising yesterday the meeting was not rancorous.
"The ministers are friends. The atmosphere was good. We had no conflict whatsoever," Mr el Badri said. "The reason we were unable to reach a decision was that everyone had their own information and data Ö so we were unable to agree. But the atmosphere was really friendly.
"As of today we're not in crisis. We have enough stocks; there is no shortage whatsoever."
Mr Aliabadi called for markets to "remain calm", while acknowledging that Opec ministers had failed to achieve their prime objective at yesterday's meeting, which was to reach a decision on the group's output target.
But analysts predicted a choppy market reaction with further oil price volatility virtually assured. "It's going to go up and then it's going to go down to where we are again, because we have demand destruction in the US, southern Europe," said Olivia Meyer, the chief executive of the MRL consultancy in London.
Mr el Badri said the Opec ministers specifically debated whether to raise crude production in the third and fourth quarters of this year.
Mr el Badri said the Opec ministers did not address the situation of Libya. There was no discussion of whether the North African country should be exempted from complying with an output quota when production and exports from its oilfields resume.