Oil prices spike sharply after OPEC fails to deliver

June 22 (UPI) -- Crude oil prices were soaring in early Friday trading after OPEC apparently disappointed with the terms of a consensus agreement on production.

Ministers from the Organization of Petroleum Exporting Countries are meeting in Vienna for a regular meeting. On the agenda is a balanced market with little room for shocks like steady declines from Venezuela, a founding OPEC member, security issues in member-state Libya and the potential loss of Iranian oil barrels.

Saudi and Iranian ministers hinted early Friday that a consensus agreement was reached, though the actual communiqué spelling out the terms wasn't yet released as of 9:15 a.m. EDT.

Vandana Hari, a market analyst and founder of Vanda Insights, told UPI early Friday that it appears OPEC will agree only on lowering compliance to 100 percent, rather than outlining any specific production figures for the second half of the year.

"The deal is still-born," she said. "OPEC has wimped out."

Production levels from participating members put compliance at more than 100 percent, though some of that is attributed to Venezuela.

The price for Brent crude oil was up 2.8 percent to $75.11 per barrel as of 9:15 a.m. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 3.4 percent to $67.75 per barrel.

Mismanagement at Venezuela's oil company Petroleos de Venezuela, or PDVSA, has left it in a state of paralysis, according to a country profile from the U.S. Energy Information Administration. Secondary sources reporting to economists at the Organization of Petroleum Exporting Countries said Venezuela production averaged 1.39 million barrels of oil per day last month, almost 10 percent lower than the first quarter average.

Libyan production, meanwhile, is down considerably after militants stormed oil depots on the coast earlier this week. For Iran, U.S. sanctions that enter into force in November could erase as much as 1 million barrels per day from the market.

Russian Energy Minister Alexander Novak said Thursday from Vienna that parties to an agreement to limit production in an effort to balance the market could consider an extra 1 million barrels per day.

Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter that signs could be pointing to a supply deficit of up to 1.8 million barrels per day in the second half of the year without additional input.

"This is a major concern because sources of oil coming from the private sector are not replacing global oil production decline rates," he said.