Saudi oil price summit under way
Saudi oil price summit under way A crucial meeting of oil producing and consuming nations to discuss soaring prices is under way in Saudi Arabia.

The US and other consumers have urged producers to boost supply, blaming lack of capacity for the recent price surge.

Top world supplier Saudi Arabia has made slight increases but says market speculation, not lack of supply, has driven prices to nearly $140 a barrel.

Several nations have faced protests as rising fuel costs have hit industries and helped push up food prices.

Energy ministers from more than 30 countries, as well as senior executives from the world's largest oil companies, are attending the conference in the city of Jeddah amid concerns that recent record oil prices are helping tip the US and other major economies towards recession.

They have announced a follow-up meeting will take place in London in October.

The BBC's economics correspondent Andrew Walker in Jeddah said it was possible that those present would not agree on any specific action on prices, reflecting their differing views on why the cost of oil has soared.

On the eve of the conference, US Energy Secretary Samuel Bodman said rising demand, especially from developing countries like China and India, was growing faster than supply.

"Market fundamentals show us that production has not kept pace with growing demand for oil, resulting in increasing prices and increasingly volatile prices," Mr Bodman said.

Saudi Arabia and countries from Opec - the Organisation of Petroleum Exporting Countries - resist this interpretation, blaming the soaring price, which has risen from about $10 a barrel to nearly $140 in the space of a decade, on market speculators.

Opec president Chakib Khelil insisted on Sunday that the price of oil was "disconnected from fundamentals" of supply and demand, according to French news agency, AFP.

Qatar's Energy Minister Abdullah Al-Attiya said the world was not facing an oil supply crisis.

But, in an apparent contradictory signal, Kuwait oil minister Mohammed al-Olaim was quoted as saying OPEC members "will not hesitate" to increase output if the market requires it.

'New deal'

The Saudis raised production by 300,000 barrels a day in May, and are widely reported to be preparing a further rise of 200,000 barrels a day in July.

But analysts say this is unlikely to have much of an effect on the price, given that the world's daily oil production is about 80 million barrels.

But correspondents say other oil producing countries have little spare capacity to boost output.

Efforts to control the price received a further blow this week, following militant attacks on Shell and Chevron facilities in Nigeria which cut the country's production by more than 300,000 barrels a day.

Consumers are calling on producers to increase refinery capacity, which limits the amount of oil that can be shipped.

British Prime Minister Gordon Brown, who is attending the Jeddah meeting, has said he will call for a "new deal" on energy.

"I'm going to make it absolutely clear that we are going to reduce our dependence on oil by investing in nuclear and renewables," he said.

"I want the oil-producing countries also to diversify out of oil and I want us to get a more balanced energy market," he said.

"We're living through the third big oil shock in 30 years. This is probably the most difficult one. Oil prices have trebled in every country of the world," he said.

"People who use oil are feeling the pinch, and it is hitting people's standards of living very heavily.

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Source: BBC