Saudi officials confirmed today that they will increase the country's oil output by 200,000 barrels a day in the month of July, a move that some hoped would help ease prices around the world.
But whatever positive effect the Saudis' production hike might have had on global oil markets was probably wiped out this week by rebel attacks in Nigeria that likely will take more than 300,000 barrels a day off the market, experts at the Jeddah Energy Meeting said today.
Saudi King Abdullah said the country was ready to increase production even further, if customer demand warrants it, but he said -- speaking for most of the oil-producing countries at the meeting -- that supply was not the problem.
Saudi Arabia also announced it is building a new refinery with tthe assistance of the French energy firm Total. Refinery capacity has been a serious bottleneck, limiting supply to the market.
Despite these announcements, Abdullah said he does not believe that problems with oil supply is what is driving up global prices. Instead, he blamed the "selfish interests" of financial market speculators.
"There are several factors behind the unjustified, swift rise in oil prices, and they are: speculators who play the market out of selfish interests, increased consumption by several developing economies, and additional taxes on oil in several consuming countries," the king said.
However, Abdullah said that Saudi Arabia, the world's largest producer of oil, had always met its customers' demands and would continue to do so.
"We increased because they (our customers) asked for it," a source in the Saudi oil industry told ABC News. But he echoed the king's assertion that supply is not the problem: "Right now, the majority of people think the price of oil is very high. There is no justification for this price."
A draft of the final statement expected to come out of the meeting declares that there is an urgent need to "take the necessary measures to guarantee the stability and permanence of the energy system and raise refining capacities" and "the strengthening of transparency of financial markets having regard to their impact on world petroleum markets," according to a report in Algeria's official APS news agency.
By taking steps to "reinforce transparency," the goal is to gain a more clear understanding "of the impact of international financial markets on prices and their volatilities," the statement will say.
The statement will declare "the need to take steps to collect more information about the actions of investment funds," as well as about speculators and "unreal judgments about the real price of a barrel of oil and the future of the crude market."
U.S. officials have disagreed with the Saudis over the reasons behind the sharp rise in gas prices, saying that it is because of growing demand, particularly in the developing world.
"The world faces an extraordinary time that, in my view, demands responsible action from both consuming and producing nations," U.S. Energy Secretary Samuel Bodman said. "In the absence of any additional crude supply, for every 1 percent of crude demand, we will expect a 20 percent increase in price in order to balance the market."
Bodman was adamant that the current high prices have to do with market fundamentals -- supply and demand. He noted that supply has been stagnating every year since 2003, while global demand has surged.