Trading blame for the oil crisis

"The Saudi side insists there is enough oil on the market and that the speculators are driving the prices up."

Representatives of the world's largest oil producers and consumers are meeting in the coastal city of Jedda in Saudi Arabia on Sunday to discuss soaring oil prices and the global fuel crisis. Saudi Arabia, the world's largest oil producer, has said it will increase its oil output by 200,000 barrels per day (bpd) in July, bringing the kingdom's oil output up to 9.7 million bpd, its highest rate since 1981. The main issue being discussed at the conference is the reason behind the rise in oil prices, Siraj Wahab, a correspondent with the Saudi daily Arab News told The Media Line. Speaking from the conference in Jedda, Wahab said representatives of the highest level from 36 countries turned up for the gathering. There are two schools of thought among the representatives, Wahab explained. "One side, led by the United States, says there is less oil on the market and as a result the prices are going up. The Saudi side insists there is enough oil on the market and that the speculators are driving the prices up." Saudi officials have said they have drawn up a working paper with the International Energy Agency, the International Energy Fund and the Organization of the Petroleum Exporting Countries (OPEC), which takes into account the views of oil producers and consumers. Iran has expressed dissatisfaction at the notion of Saudi Arabia increasing its output, saying any such move would require a consensus from the OPEC, of which Saudi Arabia and Iran are key members. OPEC has expressed similar sentiments, saying increasing oil production was "illogical." OPEC members have generally been reluctant to increase production. The rising prices have caused social and economic unrest around the world. Oil prices reached a record $139 a barrel earlier this month. As far as Riyadh is concerned, the solution needs to be aimed at controlling the speculators, Wahab said. "The Saudi Arabian currency is pegged to the [US] dollar and dealings with commodities like oil on international markets are done in dollars. They think the weakening dollar is creating this problem," he said. The Saudis, he added, want to take measures to stop the speculation and are urging the United States to devise a mechanism to help in this respect. Saudi officials have warned the public that increased production will not necessarily cause an immediate drop in prices at the gasoline pumps.