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."

 

UN Security Council lenient to Turkey’s Syria offensive

Washington probes Hezbollah ‘narcoterrorism’

Tillerson to present US strategy on Syria to European, Arab allies

Russia pension funds may invest in Aramco IPO

Iranian woman skydiver looks to break down stereotypes

Palestinians in occupied West Bank get 3G

Turkish army clashes with Kurdish militia amid US alarm

Turkey arrests dozens accused of ‘terror propaganda’

Three French female jihadists face possible death penalty in Iraq

Women journalists protest separation during Pence visit to Jerusalem

Egypt military accuses presidential hopeful of committing crimes

Israeli minister calls to ban author praising Palestinian teen

Qatar supports Turkey’s offensive against Kurds

World powers meet on Syria chemical attacks

Morocco's king appoints five new ministers

Pence pledges US embassy move by end of 2019 on Jerusalem trip

Russia calls for diplomatic solution to Yemen conflict

Russia invites Kurds to join Syria peace process

Turkey shells Kurdish targets in northern Syria

Closer look at pro-Ankara rebels amassing around Afrin

Pence set for Palestinian snub

Abbas to ask EU to recognise Palestinian state

Saudi-led coalition to give $1.5 bln in Yemen aid

Mattis: Turkey gave US advance warning on Syria operation

Yemen releases budget for first time in three years

Saudi calls for cooperation between OPEC, non-OPEC countries

France presses Turkey to end offensive against Kurds

The changing faces of al-Qaeda in Syria

Kurdish militia fire rockets at Turkish town

Moroccans wary depreciation of dirham could raise cost of living, despite benefits

Deserted streets, terrified civilians after Turkey attacks Afrin

Iraqi, Kurdish leaders hold talks on bitter regional dispute

Russia-led Syria peace congress to be held January 30

Turkey launches new strikes on Kurdish targets in Syria

Egypt's Sisi says will stand for re-election

Pence heads to Mideast despite Muslim, Christian anger

Assad regime says Syria a 'tourist' destination

Journalists arrested while reporting Sudan protests

Aid for millions of Palestinians hostage to politics

Lebanon thwarts holiday attacks using IS informant

Mortar fire wounds 14 in Syria mental hospital

Turkish military fires on Kurdish forces in Syria's Afrin

More than 32,000 Yemenis displaced in intensified fighting

UN warns of "lost generation" in South Sudan's grinding conflict

Saudi's refined oil exports offset crude curbs