June 22, 2008 3:08AM
Jeddah Jawboning
By Ashley Webster
The day of the hurriedly assembled oil summit in Jeddah, Saudi Arabia is upon us and for the hundreds of journalists from all over the world who are here to cover the event the big question remains… will it matter? We’ve already heard from U.S. Energy Secretary Sam Bodman who says OPEC has to open the taps to help relieve a tight market that has pushed crude oil prices as high as $140 a barrel. Is it that simple? Not according to Prince Abdulaziz bin Salman, the Saudi Deputy oil minister who is calling the oil price issue “complicated” and says the problem is “multifaceted and multidimensional”. Those are big words which simply mean.. we don’t really know. Is it a supply problem? Are the emerging markets proving to be too thirsty for the oil market to handle? Is it the fault of speculators who are driving prices ever higher? It depends on who you talk to and who you believe, others say it’s a combination of all those factors.
It is hoped this collective gathering of oil producers and consumers will generate a coordinated plan to calm the oil market, restore confidence over supply issues and provide an overall appearance that something is being done. But without Venezuela and a solid consensus among OPEC what will be achieved? We’ll see what revelations emerge from here in Jeddah later today and more importantly how the oil market reacts on Monday.
As they say in our business… stay tuned.
-Ashley
Comment by Ari
Jun 22nd, 2008 at 10:42 am
Anything that the oil producing cartel does will not effect the price of oil simply because it is against their interests. Also, it is obvious that the factors effecting the price of oil are very complex. They include supply, demand, cost of production and shipping as well as a number of political factors. None-the-less, the most basic of factors is the supply and demand ratio. Global demand will not decrease in the short term regardless of any policy of any single country, including the USA. Therefore it is imperative that the supply be increased. Saudi Arabia will not make any significant changes, and even if they would, they will revert to production level that ensure their maximum profits after a short while. The only alternative,in the short run, is to increase production from other sources. Why do we demand more production from the Arab nations and Venezuela while prohibit increased drilling in the USA?
Comment by Tyler
Jun 25th, 2008 at 8:27 pm
I do not think sundis and other arab nations are not doing what they can do. Saudi Aabens are just like us they want money. OPEC is a problem in the oil indestry. The real quaston is how long. will the oil prices be up nowbody nows. We need to start puping are own oil!!