Saudis to Host Oil Producers, Consumers to Talk Prices
Saudi Arabia will host a meeting of oil producers and consumers on June 22 to discuss record-high prices that are unbearable, OPEC's Secretary General said on Tuesday.
Abdullah al-Badri also called for measures to curb market speculation, a factor OPEC says is sending prices to unjustified levels.
U.S. crude hit a record over $139 on Friday, jumping nearly $11 in its largest ever one day gain.
"I ask through you, through Reuters, really we need some calm. We are panicking too much," Badri told the Reuters Global Energy Summit. "The situation is unbearable as far as we are concerned. I want to say, there is no shortage now and in the future."
The comments are the latest to underscore the view of the Organization of the Petroleum Exporting Countries that it is pumping more than enough oil and high prices reflect factors beyond its control.
"We are not happy with the current level of price for one reason. It has nothing to do with the fundamentals," he said. "Speculators are playing a big role in high oil prices. Also there are other considerations, the value of the dollar and the geopolitical situation."
Saudi Arabia, the world's top exporter and OPEC's most influential member, said on Monday it would call for a meeting of producers and consumers to discuss what it called unjustified rises in prices.
Badri said the meeting was scheduled for June 22 in Jeddah, and a source close to the meeting said many energy ministers including U.S. Energy Secretary Sam Bodman would attend.
Asked whether investment banks such as Goldman Sachs and Morgan Stanley would come, Badri said their chairmen were invited to attend.
The two banks are among the firms that have raised their oil-price forecasts recently, moves that other traders and analysts say have led to gains in the oil price.
No Demand for More
OPEC, source of two in every five barrels of oil, is pumping 32.2 million barrels per day (bpd), more than estimates of demand for its oil in 2008, Badri said.
The International Energy Agency, adviser to 27 industrialized countries, on Tuesday raised its forecast for the need for OPEC oil this year by 300,000 bpd to 31.6 million bpd—still below OPEC's output.
In support of his point that prices are being driven by factors other than supply, Badri said world consumption of 87 million bpd is smaller than the value of trading in oil-related financial instruments.
Badri said the "paper market" equaled about 1.36 billion bpd and he was critical of investment banks, some of whose forecasts for rising prices have been partly credited for sending oil to new peaks.
"Their practice at this time is not in favor of producers and consumers," he said. "We really cannot be guided by one or two speculators."
OPEC, which currently has 13 member-countries, was willing to raise production if needed, although there was no demand for extra barrels.
"Nobody is asking for oil at this time. We are checking with our member countries. There is no queue for oil," he said.
The IEA on Tuesday cut its forecast for world oil demand growth in 2008 by 230,000 bpd to 800,000 bpd, citing the impact on consumption of fuel subsidy cuts in Asia.
Demand remains robust despite rising prices and Badri said OPEC would not make as large a reduction in demand when it publishes its latest forecasts.
"Maybe we would reduce by 40,000-50,000 barrels per day in the next report, but not more," he said, referring to OPEC's Monthly Oil Market Report for June scheduled to be published on Friday. "With the high price, there will be a slowdown in demand. There's no doubt about it, but I don't think it's as much as the IEA forecast."