SAUDI SET TO RAISE OUTPUT DESPITE DEADLOCK AT OPEC MEETING - This week for the first time in ten years OPEC, the cartel of oil exporting countries, failed to reach a common agreement on output. The development has led to the coining of the phrase - the 'death of OPEC'. Iran and Venezuela mounted a counter offensive to the world's largest producer Saudi Arabia, which wanted output increased to counter spiralling oil prices. The meeting fell apart amidst reports Saudi would do its own thing.
The senior energy analyst with the London-based Centre for Global Energy Studies, Julian Lee, says the long standing divisions in OPEC were finally showed in glaring lights this week. He says the countries that make up OPEC have very different economic and political situations, but all rely on their oil revenues to run their countries. Mr Lee says that very few of the OPEC countries - with the exception of Saudi Arabia and some of the other Gulf Arab states - have spare capacity. The Arab states are worried that the current high prices will damage oil demand and eventually lead to demand cutbacks. However, the other OPEC countries just want the revenues from their oil now.
Mr Lee says that OPEC's obituaries have been mooted several times in the past 20 years and he does not see the demise of the cartel just yet. He says what this week's meeting has shown is that the Gulf Arab states hold most of the power in the organisation. He says he believes Saudi Arabia will unofficially increase its output, as will the other Arab states. He says he also believes that as long as we get oil from Saudi, petrol prices won't go up much more.
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MORNING BRIEFS - The French Finance minister Christine Lagarde is the leading nominee as the next head of the International Monetary Fund. Her main rival Agustin Carstens, who is governor of the Mexican Central Bank, has not garnered the support of China, Brazil, India and Russia who had earlier said the job should not automatically go to a European.
*** Reports today say that US secretary of State Hillary Clinton is looking to take over at the World Bank. The bank provides loans to developing nations for capital projects. Associates say Clinton has expressed interest in having the World Bank job should the bank's current president, Robert Zoellick, leave at the end of his term, in the middle of 2012. Hilary Clinton's press spokesman has denied any interest.
*** Toyota says its profit for the fiscal year to March 2012 will fall 31% to 280 billion yen ($3.5 billion) in an outlook that underlines a robust recovery in the latter half of the fiscal year from the damage of the earthquake and tsunami. Toyota had not given an earnings forecast earlier because of uncertainties in its production outlook after the disaster wiped out key parts suppliers in northeastern Japan.
*** German Finance Minister Wolfgang Schaeuble appealed in parliament today for support for a new rescue package for Greece involving private creditors, saying a disorderly default could have a disastrous impact on markets. Schaeuble also said that the situation in Greece and in Europe was serious and demanded that Greece make far-reaching reforms in exchange for more aid.
*** On the currency markets, the euro this morning is worth $1.4482 US cents and 88.8 pence sterling.
