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Jeddah Oil Meeting Achieved 'Absolutely Nothing'

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Published: Monday, 23 Jun 2008 | 8:33 AM ET
By: CNBC.com

The token gesture of Saudi Arabia committing to raise oil production meant nothing to the futures market and crude prices will just continue to climb, an energy analyst told CNBC Europe Monday.

At a meeting of oil producers and policy makers at Jeddah, Saudi Arabia promised to boost current production to 9.7 million barrels per day (bpd) and also outlined a plan to bring total production capacity up to 15 million bpd in the future.

Saudi Output Increase Fails to Lower Oil Price
Absolutely nothing was resolved at Jeddah this weekend, the only thing that was achieved was clearing the path to $150 oil, according to Stephen Schork from energy publication The Schork Report, as he and Rob Laughlin from MF Global discuss the meeting's outcome.

But that did nothing to cool prices, with New York light crude futures rising more than 1.6 percent in early-morning trading.

"The only thing that's been achieved from this meeting is that we have a clear path to $150 and beyond," Stephen Schork, editor of energy publication The Schork Report, told "Squawk Box Europe."

"Why did we even have this quote-unquote oil price summit?" Schork said. "The Saudis didn’t tell us anything we didn't already know."

"My fear is now that OPEC, or specifically the Saudis, has not given this market a reason to sell, and with the amount of speculation in this market we now have every reason to go back in and start buying this market now," he said.

Any news that may help ease oil prices is being "shrouded by the fact that nothing has come out of Jeddah," Rob Laughlin, senior broker at MF Global, said.

"Kuwait (and the) UAE had ample opportunities to join the Saudi political move to give us a bit more (oil) and they failed," Laughlin said.

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The token gesture of Saudi Arabia committing to raise oil production meant nothing to the futures market and crude prices will just continue to climb, an energy analyst told CNBC Europe Monday.

   
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