OPEC talks broke down in acrimony on Wednesday without an agreement to raise oil output after Saudi Arabia failed to convince the cartel to lift production.

"We were unable to reach an agreement — this is one of the worst meetings we have ever had," said Ali al-Naimi, oil minister for Saudi Arabia, OPEC's biggest producer.

The failure to do a deal will be a blow for industrialized consumer countries hoping the Organization of the Petroleum Exporting Countries would take action to stem fuel inflation. The United States had put pressure on Saudi to deliver a credible deal to cap crude prices and underpin faltering economic growth.

Brent crude rose more than $1 a barrel to above $118.

Naimi said OPEC's four Gulf Arab countries proposed the 12-member group increase output by 1.5 million barrels a day to 30.3 million barrels a day, including Iraq which is not bound by an OPEC quota.

Seven — Libya, Algeria, Angola, Ecuador, Venezuela, Iraq and Iran — were opposed, he said, wanting to keep production unchanged.

POLITICS INTERVENE

Analysts said that while there were opposing opinions on whether markets required more crude, the backdrop to the disagreement appeared to revolve around political tensions in the Middle East and North Africa.

"One factor is a diverging market view. Another is politics," said analyst Samuel Ciszuk at IHS. "At times of heated politics/ideological debate, Saudi struggled to dominate as much as it could have given its size vis-a-vis others in OPEC.

Gulf Arab producer Qatar has given support to Libyan rebels fighting the government of Libya's Muammar Gaddafi. And Saudi Arabia has angered Shiite Iran by using force to support the Sunni Bahraini government in suppressing a Shiite rebellion.

Easily OPEC's biggest producer, Saudi Arabia normally gets its way.

But this time those in OPEC politically opposed to the United States — led by Iran and Venezuela — found enough support to block Riyadh.

"Saudi is the cartel member most interested in earning political "points' with consuming countries, and maintaining its image as a reliable supplier of last resort," said Katherine Spector at CIBC World Markets.

"Venezuela and Iran likely feel they have less to gain politically by increasing quotas as a symbolic gesture."

UNILATERAL SAUDIS

Asked why he did not support an increase Ecuador's Oil Minister Wilson Pastor said: "We do not know what will happen with demand in the next few months."

Despite an Iranian proposal to convene again in three months in Iran, OPEC is not scheduled to meet again until December 14.

The only country with significant spare capacity, Saudi will now raise output unilaterally.

Earlier in the week a Gulf official said Saudi was already raising output by at least 500,000 bpd in June to 9.5-9.7 million bpd.

Saudi output was last as high in the middle of 2008 after oil prices set a record $147 a barrel, shortly before recession sent prices crashing.

Forecasts suggest more oil is required to stop oil prices rising again.

OPEC's Vienna secretariat sees demand in the second half of the year 1.7 million bpd higher than current cartel output.