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Oil Summit
There's no oil shortage says Opec
Article published on the 2008-06-22 Latest update 2008-06-24 10:20 TU
Saudi oil minister Ali al Nuami and Japanese economy minister Akira Ameri, Jeddah 22 June 2008
(photo: reuters)
Thirty-six countries, major international organisations and oil firms are taking part in a meeting in Jeddah, Saudi Arabia on the high cost of crude oil. The Saudi king Abdullah announced that his country has increased oil output. Head of Opec Chakib Khelil says increased production is not the answer.
Countries like the United States Germany, India and Australia as well as Japan and Britain, oil consuming countries as well as some of them being producers, want the main oil powers to increase production as a means to lowering prices. These days, the price per barrel for crude oil is almost 140 dollars.
At the special summit on Sunday in Jeddah, Saudi Arabia's King Abdullah, who called the meeting, opened it by announcing that his country had boosted output by 200,000 barrels to 9.7 million per day. Saudi Arabia's output is now at its highest level since 1981.
The oil producers cartel, Opec is divided on what action, if any, it should take. For example, Kuwait said it is ready to boost production, but Opec's president, Algeria oil minister Chakib Khelil says that such a move won't make any difference to markets. He says that there is enough oil to supply the market. Exporting Countries say they will only consider a production increase at a regular Opec meeting in September. The summit hosts and other top providers of oil want speculators' activity curbed, blaming them for the price rise.
However, US Energy Secretary Samuel Bodman says he has found no evidence to show that the futures prices are driven by speculators. He says studies show instead that production has not kept pace with demand for oil, and that has resulted in increasing prices.
British Prime Minister Gordon Brown, the senior western leader at the summit, called for a new production deal, adding that production shortages and speculation have to be studied, and said that the world was going through a big oil shock.
Several countries have seen riots and protests against high fuel prices and surging inflation and King Abdullah said Saudi Arabia would give one billion dollars to an Opec fund for developing countries and 500 million dollars in soft loans to poor countries to fund energy and development projects.
