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Saudi oil price summit under way Saudi oil price summit under way
(about 2 hours later)
A crucial meeting of oil producing and consuming nations to discuss soaring prices is under way in Saudi Arabia.A crucial meeting of oil producing and consuming nations to discuss soaring prices is under way in Saudi Arabia.
The US and other consumers have urged producers to boost supply, blaming lack of capacity for the recent price surge.The US and other consumers have urged producers to boost supply, blaming lack of capacity for the recent price surge.
Top world supplier Saudi Arabia has made slight increases but says market speculation, not lack of supply, has driven prices to nearly $140 a barrel. British Prime Minister Gordon Brown said more production was needed to ease price "uncertainty" and "volatility".
Several nations have faced protests as rising fuel costs have hit industries and helped push up food prices. Saudi Arabia said it had increased output recently but blamed market speculation, not lack of supply, on the rise in prices to nearly $140 a barrel.
Energy ministers from more than 30 countries, as well as senior executives from the world's largest oil companies, are attending the conference in the city of Jeddah amid concerns that recent record oil prices are helping tip the US and other major economies towards recession. 'Oil fund'
They have announced a follow-up meeting will take place in London in October. Energy ministers from more than 30 countries, as well as senior executives from the world's largest oil companies, are attending the conference in the city of Jeddah.
The BBC's economics correspondent Andrew Walker in Jeddah said it was possible that those present would not agree on any specific action on prices, reflecting their differing views on why the cost of oil has soared. The meeting is taking place amid fears that recent record oil prices are helping tip the US and other major economies towards recession and against a backdrop of protests against rising fuel costs around the world.
We're living through the third big oil shock in 30 years - this is probably the most difficult one UK Prime Minister Gordon Brown class="" href="/1/hi/uk_politics/7467634.stm">Seeking an oil price solution class="" href="/1/hi/uk_politics/7467151.stm">Brown in Saudi to talk oil prices class="" href="/1/hi/business/7425489.stm"> Q&A: Why prices have soared We are very concerned for consumers in all countries Saudi King Abdullah Bin Aziz
On the eve of the conference, US Energy Secretary Samuel Bodman said rising demand, especially from developing countries like China and India, was growing faster than supply. Saudi King Abdullah Bin Aziz said the world's largest oil producer had recently raised output by about 500,000 barrels a day in an effort to calm worries over supply shortages.
"Market fundamentals show us that production has not kept pace with growing demand for oil, resulting in increasing prices and increasingly volatile prices," Mr Bodman said. He proposed members of the Opec producers body contribute $1bn to a fund to help poorer countries deal with spiralling energy costs and said Saudi Arabia would also offer $500m in loans to countries struggling with fuel shortages.
Saudi Arabia and countries from Opec - the Organisation of Petroleum Exporting Countries - resist this interpretation, blaming the soaring price, which has risen from about $10 a barrel to nearly $140 in the space of a decade, on market speculators. "We are very concerned for consumers in all countries," he told the meeting.
Opec president Chakib Khelil insisted on Sunday that the price of oil was "disconnected from fundamentals" of supply and demand, according to French news agency, AFP. "And we declare our readiness to meet any additional needs."
Qatar's Energy Minister Abdullah Al-Attiya said the world was not facing an oil supply crisis. Addressing the meeting, Gordon Brown called for a "new deal" on global energy supplies to benefit both consumers and producers.
But, in an apparent contradictory signal, Kuwait oil minister Mohammed al-Olaim was quoted as saying OPEC members "will not hesitate" to increase output if the market requires it. Better information was need on the current state of global oil supplies and future demand, he said, while oil producers must diversify beyond oil by investing in other sources of energy.
'New deal' I urge all oil producers to rigorously break down old barriers standing in the way of new strategic initiatives UK Prime Minister Gordon Brown class="" href="/1/hi/uk_politics/7467634.stm">Seeking an oil price solution class="" href="/1/hi/uk_politics/7467151.stm">Brown in Saudi to talk oil prices class="" href="/1/hi/business/7425489.stm"> Q&A: Why prices have soared
The Saudis raised production by 300,000 barrels a day in May, and are widely reported to be preparing a further rise of 200,000 barrels a day in July. He also called for "enhanced co-operation" in efforts to reduce global dependence on oil in the long term.
But analysts say this is unlikely to have much of an effect on the price, given that the world's daily oil production is about 80 million barrels. "I urge all oil producers to rigorously break down old barriers standing in the way of new strategic initiatives," he said.
"We can make progress in easing the challenges which are facing so many countries in the months ahead."
The BBC's Paul Wood in Jeddah said Saudi Arabia could announce a further increase in supplies shortly but that it was naive to assume this would bring global prices down soon.
Price debate
US Energy Secretary Samuel Bodman said rising demand, especially from developing countries like China and India, was growing faster than supply.
"I believe that most of us agree on one thing: Prices are too high at present," he said.
High fuel prices have sparked protests in several countriesHigh fuel prices have sparked protests in several countries
But correspondents say other oil producing countries have little spare capacity to boost output. "And unless we act, the situation will remain unsustainable."
Saudi Arabia and other Opec members blaming the soaring price, which has risen from about $10 a barrel to nearly $140 in the space of a decade, on market speculators and high taxes.
Opec president Chakib Khelil insisted on Sunday that the price of oil was "disconnected from fundamentals" of supply and demand while Qatar's Energy Minister Abdullah Al-Attiya said the world was not facing an oil supply crisis.
Analysts say recent increases in output by Opec members are unlikely to have much of an effect on the price, given that the world's daily oil production is about 80 million barrels.
Correspondents say other oil producing countries have little spare capacity to boost output.
Efforts to control the price received a further blow this week, following militant attacks on Shell and Chevron facilities in Nigeria which cut the country's production by more than 300,000 barrels a day.Efforts to control the price received a further blow this week, following militant attacks on Shell and Chevron facilities in Nigeria which cut the country's production by more than 300,000 barrels a day.
Consumers are calling on producers to increase refinery capacity, which limits the amount of oil that can be shipped.
British Prime Minister Gordon Brown, who is attending the Jeddah meeting, has said he will call for a "new deal" on energy.
"I'm going to make it absolutely clear that we are going to reduce our dependence on oil by investing in nuclear and renewables," he said.
"I want the oil-producing countries also to diversify out of oil and I want us to get a more balanced energy market," he said.
"We're living through the third big oil shock in 30 years. This is probably the most difficult one. Oil prices have trebled in every country of the world," he said.
"People who use oil are feeling the pinch, and it is hitting people's standards of living very heavily.
Have you been badly affected by the high oil price? What would you like the summit to achieve? Send us your comments using the form below.Have you been badly affected by the high oil price? What would you like the summit to achieve? Send us your comments using the form below.
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