Saudi Arabia lambasts speculators at oil price summit
Saudi Arabia's King Abdullah launched an offensive against oil speculators on Sunday as he opened a summit on the soaring price of crude which exposed OPEC divisions over whether to increase production.
By Agencies |
JEDDAH: Saudi Arabia's King Abdullah launched an offensive against oil "speculators" on Sunday as he opened a summit on the soaring price of crude which exposed OPEC divisions over whether to increase production.
The king announced that Saudi production had now risen to 9.7 million barrels a day, the highest figure since 1981, in a bid to defuse market tensions that have forced the price of a barrel up to almost $140.
The king, who said his country would give $1.5 billion to efforts to ease energy shortages in poorer countries, told the 36 nation summit his country was "very concerned" about consumers everywhere.
He blamed increased oil consumption and taxes on fuel but added: "Among other factors behind this unjust increase in oil prices is the abhorrent acts of speculators seeking to undermine the market."
The king announced that Saudi production had now risen to 9.7 million barrels a day, the highest figure since 1981, in a bid to defuse market tensions that have forced the price of a barrel up to almost $140.
The king, who said his country would give $1.5 billion to efforts to ease energy shortages in poorer countries, told the 36 nation summit his country was "very concerned" about consumers everywhere.
He blamed increased oil consumption and taxes on fuel but added: "Among other factors behind this unjust increase in oil prices is the abhorrent acts of speculators seeking to undermine the market."
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The summit has seen an international debate over the cause of the doubling of oil prices in the past year.
The United States and other western powers have blamed production shortfalls while Saudi Arabia and other Organisation of Petroleum Exporting Countries (OPEC) members said "speculators" have played a key role.
OPEC was split however in whether to follow Saudi Arabia's lead in increasing output.
Kuwait said it was ready to increase production but the OPEC president - Algeria's oil minister Chakib Khelil - insisted this was not necessary.
US Energy Secretary Samuel Bodman said before the summit that "there is no evidence that we can find that speculators are driving futures prices" to current record heights.
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He told the meeting: "Market fundamentals show us that production has not kept pace with growing demand for oil, resulting in increasing - and increasingly volatile - prices."Even despite higher global production for oil so far this year, inventories have been drawn down and current world production (spare) capacity is below historic levels - at fewer than two million barrels per day."
Warning that prices would almost certainly rise further, Bodman said: "In the absence of any additional crude supply, for every one percent increase in demand we would expect a 20 per cent increase in price in order to balance the market."
German Economy Minister Michael Glos added: "The oil markets now need a strong signal from the production side."
An increase in production would be "a strongly needed signal to the financial markets to not gamble any more on an increasing oil price," he told the summit.
Finance Minister P Chidambaram and Australia's Resources and Energy Minister Martin Ferguson also called for oil-producing nations to increase their output, diplomats said.
Kuwaiti Oil Minister Mohammed al-Olaim said that OPEC members "will not hesitate" to increase production if the market needs it.
But OPEC president Khelil insisted there is enough oil to supply the market.
"We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply," he told a briefing.
"Why would you have a supply problem when demand is going down?" he asked. Khelil said the 13-nation OPEC would only consider a production increase at a regular meeting in September.
"We believe speculation, in its noble and not noble terms, has its impact," the OPEC chief said.
Khelil said much of the price explosion can be explained by currency market turbulence. "A lot of people are talking about the uncertainties about the reserves. But what about the uncertainties on the dollar?"
A Saudi source said there is scope for other countries to follow his country's production increase as there are up to three million barrels of spare capacity within OPEC nations.
British Prime Minister Gordon Brown, the senior western leader at the summit, called for a "new deal" between consumers and producers.
But like many Europeans at the meeting he said production shortages and speculation had to be studied.
Brown said that the world was going through "the biggest of all three oil shocks" in recent decades.
An increase in production would be "a strongly needed signal to the financial markets to not gamble any more on an increasing oil price," he told the summit.
Finance Minister P Chidambaram and Australia's Resources and Energy Minister Martin Ferguson also called for oil-producing nations to increase their output, diplomats said.
Kuwaiti Oil Minister Mohammed al-Olaim said that OPEC members "will not hesitate" to increase production if the market needs it.
But OPEC president Khelil insisted there is enough oil to supply the market.
"We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply," he told a briefing.
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"Why would you have a supply problem when demand is going down?" he asked. Khelil said the 13-nation OPEC would only consider a production increase at a regular meeting in September.
"We believe speculation, in its noble and not noble terms, has its impact," the OPEC chief said.
Khelil said much of the price explosion can be explained by currency market turbulence. "A lot of people are talking about the uncertainties about the reserves. But what about the uncertainties on the dollar?"
A Saudi source said there is scope for other countries to follow his country's production increase as there are up to three million barrels of spare capacity within OPEC nations.
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British Prime Minister Gordon Brown, the senior western leader at the summit, called for a "new deal" between consumers and producers.
But like many Europeans at the meeting he said production shortages and speculation had to be studied.
ADVERTISEMENT
Brown said that the world was going through "the biggest of all three oil shocks" in recent decades.
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