QuickStockAnalysis.com

Saudi Arabia yesterday called for an urgent meeting of oil producing and consuming countries to discuss what it called the “unjustifiable rise in oil prices.” It also offered to coordinate with the Organization of Petroleum Exporting Countries (OPEC) and other major producers to ensure adequate supply in order to curb prices.

The decision to hold an oil conference was taken by the Council of Ministers, chaired by Custodian of the Two Holy Mosques King Abdullah.

Current oil prices are unjustifiable in terms of petroleum facts and market fundamentals,” the Cabinet said.

However, the Kingdom pointed out that the market has sufficient supply and an increasing commercial inventory. Oil prices surged by nearly $11 on Friday to a new record above $139 a barrel, partly on the weakness of the dollar and also because of increasing tension between Israel and Iran, the world’s fourth largest oil exporter.

“Saudi Arabia will coordinate with the OPEC and other major producers to ensure adequate supply in both the present and the future,” the Saudi Press Agency (SPA) quoted the Cabinet as saying. “The Kingdom will also work to prevent oil prices from rising in an unjustified and abnormal manner, affecting the international economy, especially the economies of developing countries.”

The Cabinet statement disclosed that Saudi Arabia increased oil production this month and had informed oil companies and consuming countries of its readiness to supply additional quantities of oil to meet their requirements.

The Cabinet instructed Petroleum and Mineral Resources Minister Ali Al-Naimi to call for the oil conference, which would include representatives from producing and consuming countries as well as companies involved in production, export and sale of oil, SPA said, adding that the meeting would discuss the reasons for rising oil prices and how to deal with them effectively.

Consuming governments have been putting pressure on OPEC, the supplier of more than a third of the world’s oil, to boost output in order to ease the effect of high prices on their economies.

OPEC blames factors beyond its control, including speculation and political tension, for the price rise. Saudi Arabia boosted output by 300,000 bpd to pump 9.45 million bpd in June, and Al-Naimi said last month the Kingdom was meeting all the demand for its crude.

OPEC President Chakib Khelil said that had it not been for the weak dollar, political tensions and speculation, oil prices would probably be around $70 a barrel. “In terms of fundamentals, there is no problem of supply and demand. There is much more a bubble due to speculation, which is based on a depreciating dollar and geopolitical tensions,” Khelil said yesterday.

The Cabinet praised the outcome of the recently concluded international conference on interfaith dialogue in Makkah, which was attended by more than 600 delegates from around the world.

At the beginning of the meeting, King Abdullah briefed the ministers on the outcome of his talks with Palestinian President Mahmoud Abbas and Pakistani Prime Minister Yousaf Raza Gilani. The Cabinet reiterated Saudi Arabia’s unwavering support for the Palestinian cause.

Crown Prince Sultan, who returned from Spain on Sunday after a four-day official visit, briefed the Cabinet on his talks with Spanish King Juan Carlos and top officials.

The Cabinet hoped that the royal visit would take Saudi-Spanish relations to new heights.

Culture and Information Minister Iyad Madani said the Cabinet meeting also approved the principles and measures to tackle the delay in implementation of government projects by contractors. Earlier, the Cabinet set up a ministerial committee to study the issue.