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."

 

US warplanes carry out first strikes on IS near Baghdad

Erdogan: Turkey would welcome exiled Brotherhood leaders

UN brokers Israeli-Palestinian deal on Gaza reconstruction

Qaeda branches urge jihadists to unite against US

Scottish independence campaigners find support in Palestinian bagpipers

Iraq parliament votes down PM's security nominees

Despite war, South Sudan replaces foreign workers with locals

IS jihadists shoot down Syria warplane

Renegade former general claims air raid on Libya militia position

Six Egypt policemen in Sinai bomb attack

UEFA urged not to award 2020 European Championship to Israel

Israel sees future war with Hezbollah

Germany tries first 'Islamic State jihadist'

Egypt court bails top 2011 revolt activist

Iran rejected US request to cooperate against IS

Iran ridicules anti-jihadist international conference

Egypt textile factory collapse kills six

Mali separatists agree to speak with one voice

Qatar starts to curb Brotherhood’s activities

Coalition meets in Paris to plan fight against IS

Around 930 French citizens or residents involved 'in jihad' in Iraq, Syria

Yemen rebels, officials to meet with UN to end standoff

Qatar-based Egypt's Brotherhood leaders to relocate

Cameron chairs emergency meeting over British hostage beheading

Hollande defends arming Kurds against IS

43 Israeli soldiers condemn 'abuses' of Palestinians

Egypt urged to free more than 20 demonstrators

Turkey’s internet censored further

Tunisia Islamists clash with police in protest

10 Arab states agree to 'share' US-led fight against IS

Obama awaits Congress approval of Syria rebel aid

Hollande in Iraq to back new government

Lebanon to set up refugee camps along border with Syria

Russia slams unilateral US airstrikes on jihadists in Syria

Four Qaeda suspects in Yemen drone attack

Meshaal: Hamas may hold direct talk with Israel

UN Syria envoy says world must confront terrorist groups

Turkey refuses to allow US-led coalition to hit IS from its air bases

Yemen president, Shiite rebels reach deal

EU warns Gaza violence could re-ignite within 'months'

Thani denies UAE, Egypt conducted air strikes in Libya

Obama: We will destroy ISIL in Syria and Iraq

Beirut urges 'common front' against IS 'monsters'

Obama to steel Americans for long battle against IS

Turkish prosecutor demands life sentences for protesting soccer fans