After the Oil Meeting: Calm Market Ahead?
Saudi Arabia convened conference to bring calm to volatile market.
JEDDAH, Saudi Arabia, June 24, 2008— -- Sunday's Jeddah Energy Meeting was meant to stabilize the oil markets, giving much-needed relief to countries and consumers suffering from record high prices. In the wake of price jumps that have chilled the global economy, including a record one-day jump of nearly $11, Saudi Arabia convened the meeting and called for calm.
The thirty-six countries represented at the meeting -- both oil producers and consumers -- left Jeddah without a clear picture for what's behind the surge in oil prices. By Tuesday the lack of any bold actions or short term answers didn't keep the price from rising higher.
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"Given that the Saudis didn't tell the market anything it did not already know, we fear the path to $150 has been opened up," said Stephen Schork in the Schork Report, an oil industry publication.
The summit also highlighted one of the biggest divides between oil producers and their customers. The US and other consumer countries insist the problem comes from market fundamentals – an imbalance of supply and demand.
Producing countries like Saudi Arabia, whose oil fields will soon be pumping at a 30 year high, insist the world's markets have enough oil. As evidence Nasser Amin, a Senior Vice President of state-owned oil company Saudi Aramco, told ABC News there were no orders for oil that had not been met.
"We are telling our customers we are going to give them whatever they need this year and next year," Ibrahim Al Muhanna at the Saudi Ministry of Petroleum told ABC News.
Oil consumers like the United States and Europe want to see more oil on the market, hoping that will ease price pressure. But producers like OPEC, which represents 40% of the world's supply, say output isn't the issue. They point to factors like the weak US dollar, political instability in Nigeria and the Middle East, and investors moving money into commodities markets.
"All those factors have had an impact…that's why it's hard to see any concrete outcome from one day of discussion," said Al Kadiri of PFC Energy.
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