First Published: 2008-06-21

 
Are market speculators to blame for high oil prices?
 

Oil powers and consumers haggle over how much to blame market speculators for sky-high crude prices.

 

Middle East Online

Who should take the blame?

JEDDAH - Oil powers and consumers haggled Saturday over how much to blame market speculators for the spectacular rise in crude prices ahead of a summit on the energy crisis, officials said.

Saudi Arabia has organised a meeting of producers and consumers for Sunday at which Britain's Prime Minister Gordon Brown is to be a keynote speaker.

While growing demand is highlighted along with the need for greater investment in refining capacity, some nations want to blame market funds that speculate on oil futures for the rise of oil to almost 140 dollars a barrel, officials said.

A working paper for the summit's final declaration calls for action to "improve the transparency and regulation of financial markets through measures to capture more data on index fund activity and to examine cross exchange inter-actions in the crude market."

A senior international energy official involved in the summit talks called the document "highly controversial" because of the attack on markets.

The document says that index funds and other investors have "unrealistic assessments" of the future value of oil.

The senior energy official said that the attack may be toned down in the final document of the Jeddah Energy Meeting on Sunday because of opposition from the United States and other major industrial powers.

Saudi Arabia is believed to be a supporter of the movement to put pressure on market players.

Ibrahim Al-Muhana, a top advisor to Saudi Arabia's oil ministry, told a press conference in Jeddah on Friday: "The emergence of new players has made it difficult for us to put our fingers at a clear reason" for the price rise.

Saudi media quoted him as attributing the rises to increased market speculation on oil.

The oil powers have sought to divert consumer calls for greater production to counter the energy inflation, despite Saudi Arabia's promise to produce an extra 200,000 barrels a day.

Organisation of Oil Exporting Countries (OPEC) president Chakib Khelil said "just because car and computer prices were high, would one ask their producers to make more?"

The summit document calls for improved information gathering by groups such as OPEC, the International Energy Agency (IEA) and the International Energy Forum (IEF) "to improve transparency" and better assess "the impact of financial markets on the level, volatility of oil prices which can be used to better understand the market situation."

The different forecasts on production and consumer needs produced by the different groups "send mixed signals to the market," fuelling fears about oil supplies, said the international energy official.

The draft calls for international action for "reducing uncertainties" and "necessary actions to ensure stability and sustainability of the energy system."

It says increased refining capacity is needed because new construction has been shackled by "constrained refining investment, environmental standards, cost inflation and stringent laws and regulations, resulting in poorer refining returns."

"Spare capacity throughout the oil supply chain is important for the stability of the global oil market, hence an appropriate increase in investment both upstream and downstream is necessary to ensure that the markets are supplied in a timely and adequate manner," says the document.

The final declaration is also expected to call for greater assistance from governments, institutions and regional groups to "alleviate the consequences of higher oil prices on the least developed countries."

The senior international energy official said: "We want to cool down markets. Saudi Arabia is really concerned. They are after stabilization because if the world economy goes into recession that will hurt oil demand."

 

France, US clash with Iran over changing nuclear accord

Saudi Arabia claims killing of Yemen rebel leader

EU to Russia, Iran: Bring Syria to peace talks

Iraq's Shiites split ahead of crucial vote

Iraq’s ex-football stars from sports to politics

Turkey opposition journalists demand acquittal in terror trial

UN says Syria blocking humanitarian aid to Douma

OPCW experts visit second site of alleged Douma gas attack

Israeli policeman gets 9 months jail for killing Palestinian

US court rules for Arab Bank in precedent-setting case

Lebanese candidates pay hefty price for media coverage

Madani’s resignation sheds light on Iranian power play

Kuwait expels Filipino ambassador over treatment of workers

Syria aid donations for 2018 fall short of amount hoped

Growing anti-war sentiment in the US Congress could spell trouble for Trump

Liverpool’s Salah wins Israeli defence minister’s plaudits

Body of assassinated Palestinian driven through Malaysian capital

'Gap in perceptions' threatens wider Middle East war

UNESCO picks Morocco for project on prevention of violent extremism

Syrian regime retakes region near Damascus from rebels

Mogherini: Iran deal 'needs to be preserved'

Syria rebels prepare as Assad sets sights on next target

Iran's Rouhani questions 'right' to seek new nuclear deal

Trump, Macron call for 'new' nuclear deal with Iran

Syria's Idlib 'big new challenge' for international community

UNRWA chief says Palestinian aid $200 million short since Trump cuts

Bad memories resurface at Raqa’s mass grave

Turkey newspaper chief slams journalist terror trial

Setback for Yemen rebels after strike takes out leader

Saudi issues Islamic sukuk sale to finance deficit

Yarmuk, an epicentre of Syria's bloody conflict

Egypt’s Eurobond succeeds but risks remain

Egypt former anti-corruption chief gets five years jail

Philippines apologises to Kuwait over 'maid rescues'

Iran urges EU not to pay Trump ‘ransom’ over nuclear deal

UAE to finance project to rebuild Mosul's Grand al-Nuri Mosque

EU, UN begin major conference for Syria aid

New tensions rise between old rivals Turkey and Greece

Rouhani warns Trump against betraying nuclear deal

10 killed in Toronto “deliberate” van attack

Nine people killed in Toronto van attack

Yemen Huthi political leader killed in coalition raid

Syria security chief refuses Lebanon court appearance

Air raid kills dozens at Yemen wedding

Algeria draws Europe’s ire by cutting imports, boosting trade with China