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Oil price surges as OPEC lashes out at Bush

VIENNA — Oil surged Wednesday, rising a remarkable $5 a barrel to a new record over $104 after the government reported a surprise drop in crude oil stockpiles and OPEC held production levels steady.

The 13-nation Organization of Petroleum Exporting Countries on Wednesday accused the United States of economic "mismanagement" that it said is pushing oil prices to new record highs and rebuffed calls to boost output, laying the blame on the Bush administration.

Light, sweet crude for April delivery jumped $5 to settle at a record $104.52 a barrel on the New York Mercantile Exchange. Shortly after the Nymex closed, oil briefly rose to $104.95, a new trading record.

OPEC said it would maintain current production levels because crude supplies are plentiful and demand is expected to weaken in the second quarter.

OPEC president Chakib Khelil told reporters that the global market is being affected by what he called "the mismanagement of the U.S. economy," and that America's problems were a key factor in the cartel's decision to hold off on any action.

"If the prices are high, definitely they are not due to a lack of crude. They are due to what's happening in the U.S.," Khelil said. "There is sufficient supply. There's plenty of oil there."

Khelil's comments came one day after Bush lashed out at the organization, warning Tuesday: "I think it's a mistake to have your biggest customers' economies slowing down as a result of higher energy prices."

White House spokesman Dana Perino said Wednesday that Bush was "disappointed" OPEC didn't do more to rein in prices, which some say are pushing the U.S. economy into recession.

Although OPEC opted not to intervene, it did pledge to maintain "constant vigilance" over the market.

There had been some speculation that OPEC might actually cut production — a move that would drive prices even higher, along with profits for cartel members — but Khelil said a cut was not discussed at Wednesday's meeting. He said OPEC had no plans to meet again before its next scheduled conference in September.

Khelil said crude stocks were well within their five-year average and the 13-nation group was not inclined to either boost or reduce its current output of about 32-million barrels a day. OPEC satisfies roughly 40 percent of the world's demand for crude.

Oil shot up a dramatic 19 percent last month as the falling dollar prompted speculators and other investors to shift cash to crude and other commodities as a hedge. Among other reasons for the spike: tensions in the oil-rich Middle East and Turkey's incursion into northern Iraq.

Key cartel members said this week that prices in the $85 to $90 per barrel range would be optimal.

The 13 OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. Iraq is the only member not subject to the cartel's output quotas.

Oil price surges as OPEC lashes out at Bush 03/05/08 [Last modified: Thursday, October 28, 2010 9:28am]
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