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KUWAIT CITY: OPEC kingpin Saudi Arabia hosts a meeting of the
world’s top oil producers and consumers on Sunday aimed at
soothing rattled markets, but it appears little can be done on the
ground to curb soaring prices, analysts say.
A statement posted Thursday on the website of
the Saudi embassy in London said the kingdom would boost its daily
oil output by 200,000 barrels.
The statement was later withdrawn from the
website but not officially denied. “Saudi Arabia recently
announced a plan to increase oil output by 200,000 barrels per
day,” the statement said.
The world’s biggest exporter of crude oil,
believed to be the only producer with spare output capacity, had
been expected to announce the output hike at the Jeddah Energy
Meeting on Sunday.
“King Abdullah is to open an international
energy conference in Jeddah on June 22 to discuss ways to curb
rising oil prices and to stabilize the international market,” the
statement added on Thursday. “As many as 38 countries, four
international organizations and 30 oil companies have agreed to
attend the conference, at which the British Prime Minister Gordon
Brown will give an address.”
The hike would lift Saudi Arabia’s crude
production to 9.65 million bpd. The statement however did not
specify when the additional production would begin.
But Thursday’s announcement did appear to
confirm comments on Sunday from UN Secretary-General Ban Ki-moon,
who said Saudi Arabia had told him it would increase its oil output
by 200,000 bpd in July.
Saudi Arabia had ramped up output by 300,000 bpd
last month following a visit by US President George W. Bush to the
oil-rich kingdom. But there are fears further production increases
would not keep up with future demand.
Saudi Arabia hopes “the [Jeddah] meeting will
give a much-needed boost to the confidence of the oil market,”
Kuwaiti oil analyst Hajjaj Bukhdur said.
“I believe Saudi Arabia wants the meeting to
help reduce the [negative] psychological impact through a
transparent debate focusing on the essence of the crisis in the oil
market,” Bukhdur told AFP.
The close Western ally has come under huge US
pressure to boost output to help end volatility in world markets,
where oil prices have jumped fivefold since 2003.
Last week, it called for the June 22 meeting of
producer and consumer nations as well as companies operating in the
oil business “to discuss the jump in prices, its causes and how to
deal with it objectively.”
Saudi Oil Minister Ali al-Nuaimi had stressed
that oil-consuming countries should also play their part to
stabilize prices by reducing national taxes and combating
speculators.
Kevin Norrish of Barclays Capital said the
reported increase in Saudi production would mark the highest monthly
rate since August 1981.
“However, in our view, the move does not seem
to be enough to reverse the recent strength in prices, as it does
little to repeal the longer-term expectations for tight
demand-supply balances,” he said.
Bukhdur also said that under “normal
production conditions” Saudi Arabia has a spare capacity of only
300,000 bpd, but that “under extreme production conditions, it can
maximise this to two million bpd.”
“This is however not sustainable, risky and
not dependable,” Bukhdur said. “It can cause lots of accidents
and stoppages and, more importantly, it cannot last more than one
year.”
Iran, OPEC’s second largest producer, said it
would be opposed to any Saudi hike without a consensus from fellow
members of the cartel and dismissed the surge in prices as
artitifical.
Kuwait’s Al-Shall Economic Consultants drew a
pessimistic picture for the future of oil, saying there had been
fundamental change and that tight supplies would continue to haunt
the market.
“A fundamental change has taken place in the
energy market ... Supply is controlling prices. The world is aware
that the ability [of producers] for more oil supplies has become
extremely limited,” it said in a recent report.
“Perhaps we are on the verge of a new era in
which oil could lose its importance, exactly as coal did 100 years
ago,” said Al-Shall.
-- AFP
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