Saudi talks call seen as bid to shift oil price blame
A call by oil powerhouse Saudi Arabia for a meeting between producers and consumers to discuss the root causes of record high crude prices is aimed at showing that OPEC states are not responsible for the surge, Gulf analysts said on Tuesday.
By Agencies |
KUWAIT CITY: A call by oil powerhouse Saudi Arabia for a meeting between producers and consumers to discuss the root causes of record high crude prices is aimed at showing that OPEC states are not responsible for the surge, Gulf analysts said on Tuesday.
"The meeting is needed to discuss objectively the root causes of oil price hikes instead of simply blaming producers for the rise. All sides have got a role to play in resolving the crisis," Kuwaiti oil analyst Kamel al-Harami said.
"It is an opportunity for a transparent and clear dialogue between producers and consumers to collectively explore solutions to the world's energy crisis, now and in the future," Harami told reporters.
On Monday, the Saudi cabinet asked Oil Minister Ali al-Nuaimi to "convene a meeting soon of representatives of producer and consumer nations and firms operating in the production, export and trading of oil to discuss the jump in prices, its causes and how to deal with it objectively".
OPEC Secretary General Abdalla El-Badri told reporters on Tuesday that the meeting would take place on June 22 in the Saudi city of Jeddah.
Saudi Arabia, which is by far the world's biggest oil producer and exporter, also said it was ready to provide any extra supplies needed, but reiterated that the surge in prices which saw benchmark New York crude hit a lifetime high of 139.12 dollars last Friday was not justified by market fundamentals.
Other members of the Organisation of Petroleum Exporting Countries cartel welcomed the Saudi proposal as a means of getting across their point that the surge in prices was not the fault of producer states.
"We have to involve both parties because we are in the same boat," Kuwaiti Oil Minister Mohammad al-Olaim told reporters. "But, we don't think that for the time being that the fundamentals are affecting the issue."
Iran's envoy to the cartel, Mohammad Ali Khatibi, told AFP: "It could be useful if we delve into the root cause of the market problems.
"They (consumer countries) should change their approach to solve the problems instead of threatening confrontation and using levers such as sanctions and occupation," he added, in allusion to the US-led occupation of Iraq and the sanctions imposed on Iran over its nuclear programme.
"The meeting is needed to discuss objectively the root causes of oil price hikes instead of simply blaming producers for the rise. All sides have got a role to play in resolving the crisis," Kuwaiti oil analyst Kamel al-Harami said.
"It is an opportunity for a transparent and clear dialogue between producers and consumers to collectively explore solutions to the world's energy crisis, now and in the future," Harami told reporters.
On Monday, the Saudi cabinet asked Oil Minister Ali al-Nuaimi to "convene a meeting soon of representatives of producer and consumer nations and firms operating in the production, export and trading of oil to discuss the jump in prices, its causes and how to deal with it objectively".
OPEC Secretary General Abdalla El-Badri told reporters on Tuesday that the meeting would take place on June 22 in the Saudi city of Jeddah.
Saudi Arabia, which is by far the world's biggest oil producer and exporter, also said it was ready to provide any extra supplies needed, but reiterated that the surge in prices which saw benchmark New York crude hit a lifetime high of 139.12 dollars last Friday was not justified by market fundamentals.
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Other members of the Organisation of Petroleum Exporting Countries cartel welcomed the Saudi proposal as a means of getting across their point that the surge in prices was not the fault of producer states.
"We have to involve both parties because we are in the same boat," Kuwaiti Oil Minister Mohammad al-Olaim told reporters. "But, we don't think that for the time being that the fundamentals are affecting the issue."
Iran's envoy to the cartel, Mohammad Ali Khatibi, told AFP: "It could be useful if we delve into the root cause of the market problems.
"They (consumer countries) should change their approach to solve the problems instead of threatening confrontation and using levers such as sanctions and occupation," he added, in allusion to the US-led occupation of Iraq and the sanctions imposed on Iran over its nuclear programme.
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Libyan National Oil Corporation chairman Shukri Ghanem said consumer countries needed to realise that producers had little room for manoeuvre. "I don't think we can do much," he told reporters.
Saudi economist Ali al-Dakkak said world prices were being driven by "wild speculation" and a lack of refining capacity in consumer countries, especially the United States.
"Consumer demands for increasing output are politically motivated," he said.
OPEC has maintained that the oil market is adequately supplied and that there is no need for any output increase, although a shortage of spare production capacity has kept the market on edge.
Harami said that there needed to be more investment in boosting capacity so that there was a buffer to meet spikes in demand.
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"The world needs at least three million barrels (per day) of sustainable spare output capacity, which should be increased by one million barrels every year. This requires huge investments," Harami said. At present, only Saudi Arabia has some spare production capacity, but well below the required levels, he said.
On the other hand, consumer nations must "reciprocate by expanding their refining capacity, reduce high energy taxes and ensure the stability of demand."
OPEC members are spending around 160 billion dollars over the next five years on boosting their production capacity, but they want guarantees that there will be buyers for their oil, Harami said.
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Dakkak said: "Certainly, the kingdom wants to see a rational solution to the oil price hikes. It is a true call, but producers alone cannot provide a solution. "What the consumer nations have been doing is blaming only producers... The meeting aims to initiate an objective dialogue that could produce better results."
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