Saudi Arabia Calls for Oil Producer-Consumer Meeting

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The oil minister of Saudi Arabia, Ali al-Naimi, called for a meeting “soon” with oil producing and consuming nations to discuss how to deal with record prices.

“The increase in prices isn’t justified in terms of market fundamentals,” the Saudi government said yesterday in a statement after a cabinet meeting in Jeddah.

Saudi Arabia, the world’s biggest oil exporter, said it increased output this month and has told all the oil companies it deals with that it’s ready to provide them with additional supplies if needed. The statement comes after oil rose more than $10 June 6 to a record $139.12 a barrel as the dollar weakened.

“Will a meeting between Saudi Arabia and some of the producers and consumers result in concrete action? I kind of doubt it,” the chief energy economist at Deutsche Bank, Adam Sieminski, said in a telephone interview. “But at least it’s a means to get some thoughts down on the table.”

Officials from the Organization of Petroleum Exporting Countries have repeatedly blamed market speculation, the weak dollar, and political tensions in producing nations for the doubling in oil prices over the past year. The president of the OPEC, Chakib Khelil, said earlier yesterday in Algiers that without those elements, oil would be trading near $70 a barrel.

The 13-nation group, which pumps more than 40% of the world’s oil, has kept official output targets unchanged during its past three meetings, on March 5, February 1, and December 5. The group’s next scheduled meeting is on September 9 in Vienna.

The Saudi government “realizes that the oil market has adequate supply” and commercial inventories are elevated, according to the statement distributed by the Saudi Press Agency.

Mr. Naimi said last month, when President Bush was visiting the kingdom, that Saudi Arabia would raise output by 300,000 barrels a day to 9.45 million barrels a day in June in response to rising demand from its customers.

Speaking on CNBC, the secretary of energy in America, Henry Paulson, said he welcomed the Saudi efforts to organize a meeting.

“It’s got to be constructive, so I welcome it, but again, I think that the solutions to the big problem, you know, are longer term solutions in terms of investing in supply and alternative sources of energy,” he said.


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