The oil summit in Jeddah ended in disarray yesterday with OPEC president, Algeria’s Chakib Khelil, blaming speculators for the high oil price.
Leading oil producer, Saudi Arabia’s King Abdullah opened the meeting of producer and consumer nations by saying his country will boost output by 200,000 barrels to 9.7 million per day during the coming week.
Kuwaiti Oil Minister Mohammed al-Olaim followed his lead, saying that OPEC members ‘will not hesitate’ to increase production if the market needs it.
But the 13-nation Organisation of Petroleum Exporting Countries (OPEC) president Khelil insisted: ‘We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply.
‘Why would you have a supply problem when demand is going down?’
Khelil said OPEC would only consider a production increase at a regular meeting in September.
He stressed: ‘We believe speculation, in its noble and not noble terms, has its impact.
Khelil added: ‘A lot of people are talking about the uncertainties about the reserves. But what about the uncertainties of the dollar?’
His remarks prompted an angry response from US Energy Secretary Samuel Bodman.
He had insisted before the summit that ‘there is no evidence that we can find that speculators are driving futures prices.’
Bodman 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.’
Bodman warned: ‘In the absence of any additional crude supply, for every one per cent increase in demand we would expect a 20% increase in price in order to balance the market.’
German Economy Minister Michael Glos added: ‘We need more oil in the world market quickly in order to stop the spiralling prices at the gas pumps.’
India’s Finance Minister P. Chidambaram and Australian Resources and Energy Minister Martin Ferguson also called for oil-producing nations to increase their output.
British Prime Minister Gordon Brown called for a ‘new deal’ between consumers and producers.
As well as calling for an increase in oil production, he appealed to oil producers to invest in a £100bn drive towards long-term energy projects in Britain, such as wind farms and nuclear power.
He told the summit: ‘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.
‘People who use oil are feeling the pinch, and it is hitting people’s standards of living very heavily. There must be a new deal now, between the oil consumers and the oil producers.’
He added: ‘I want the oil-producing countries also to diversify out of oil and I want us to get a more balanced energy market, which will mean that all of us will be reducing our dependence on oil in the years to come.’
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