Opec at war as Libya tensions surface

10 April 2012

Libya's raging civil war has set the scene for the most hostile Opec meeting in years this week, but the timing is unwelcome as the global recovery approaches a potential turning point.

The cartel - which accounts for around 40% of world supply - has so far failed to fill the gap in the market left by Muammar Gaddafi's battle for survival, leaving the global market around 1.4 million barrels short.

But political tensions are set to dominate during the meeting, as Qatar, Kuwait and the United Arab Emirates are backing the overthrow of a fellow member by pumping financial and military aid to Gaddafi's opponents.

Both Gaddafi and the rebels may even bring the civil war to Vienna by sending their own delegates to this week's meeting.

Most expect the cartel to hold production quotas unchanged, although there are growing splits in the cartel over the way forward with Saudi Arabia leading the calls for the production of an extra million barrels of oil a day.

But with oil prices lingering at levels which are damaging for global growth and threatening to choke off a fragile recovery in the West, this is definitely not the time for hotheadedness.

An oil-driven double dip recession - and the crashing crude costs that would inevitably result - is in nobody's interests.

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