Internal dissension erodes OPEC's power

VIENNA, Austria - OPEC's stunning admission this week of major dissent in its ranks has left it reeling and its status as the world's oil power broker tarnished, perhaps beyond repair.

The major issue is what will happen to oil prices in the long term as a newly strengthened Iran takes on Saudi Arabia, the traditional Organization of Petroleum Exporting Countries heavyweight, in what some see as a proxy attack on the United States, the Saudis' ally and Iran's longtime foe. At Wednesday's meeting in Austria, the OPEC ministers failed to agree on new production targets.

Rejecting a rise in output keeps oil's price high - it rose $1.19 Thursday to $101.93 - not only filling Iran's coffers, but also possibly kicking the legs out from under a feeble U.S. economic recovery.

"There was a time when rumors of the breakup of OPEC would have sent the oil price plummeting," said a Monument Securities research note. "But the realities of global supply and demand have been such . . . that OPEC has lost control over the crude oil market."

Wednesday's meeting exposed the bickering that OPEC nations usually are at pains to hide and shattered the image that OPEC acts with a single will to squeeze an energy-hungry world.

Some OPEC leaders worry that civil wars in Libya and Yemen could spill over to their countries. Mindful of the overthrow of Egypt's and Tunisia's rulers, they welcome prices of $100 a barrel and above as a way to increase social spending and placate restive populations.

Members clashed amid the challenges of Mideast unrest and a stubbornly weak world economy that cannot afford pricey crude but still needs more oil to spark an upswing.

Breaking OPEC's code of silence, Saudi oil minister Ali Naimi named participants opposed to the Saudi-led drive to lower prices by pumping more crude.

Calling Wednesday's session "one of the worst meetings we've ever had," he underscored the message that OPEC unity was dead - at least for now - and served notice that the Saudis will sell more oil alone if they have to.

Sunni-ruled Saudi Arabia, which produces the lion's share of OPEC output, has long vied with Shiite-ruled Iran for regional dominance, and the two have often been at loggerheads over pricing. OPEC usually has fallen in behind Saudi Arabia - but not this time.