King Abdullah, Custodian of the Two Holy Mosques, said that selfish interest of speculators, taxes, and increased consumption in developing countries are the factors that send oil prices soaring to record highs. “Brothers and sisters there is a group of elements for the quick and unjustified increase of petroleum prices in the recent time. They include the frivolity of the speculators in the market for selfish interests the increase of consumption in a number of rising economies, increasing taxes on petroleum in a number of consuming countries,” he said at the Jeddah Energy Meeting (JEM) on Sunday here. “Despite these facts and despite that OPEC has not issued a decision for pricing since many decades, and left the issue of price to the market, and despite its keenness on meeting the increasing demand, yet we find some people accusing OPEC alone,” he further said. The King moreover said “in the light of this, your great mission becomes clear, which is the disclosing of the truth. Your mission is to rule out biased rumors and to reach the real causes for the increase in price, and how to treat with that development clearly and transparently, and to disclose the outcome to the entire world s nations, so as not to treat the innocent with the behavior of the wrongdoer, and only then the truth will survive.” Asking the oil-producing nations to increase their output, P. Chidambaram, India's finance minister, said the causes for the current pandemonium in oil prices “lie in unregulated over-the-counter markets and futures trading in oil.” He said there is ample evidence that large financial institutions, pension funds, hedge funds etc. have channelized trillions of dollars into commodity investments and commodity derivatives. “It is common knowledge that these financial transactions are unregulated and highly opaque. The demand for oil generated by these funds is purely speculative demand,” he said. In the present context, he urged both producers - especially OPEC - and consumers to wrest control over oil trading from the hands of the speculators. He further stressed the need for the oil industry to reassert its leadership in price formation and not remain passive spectator of speculation and paper trading in oil. “The global hydrocarbon community must address this situation through appropriate supply-side responses and calm the oil markets,” he said. Kuwait said it was ready to increase production, but the OPEC president - Algeria's Oil Minister Chakib Khelil - insisted this was not necessary. US Energy Secretary Samuel Bodman said before the summit that “there is no evidence that we can find that speculators are driving futures prices” to current record heights. He told the meeting: “Market fundamentals show us that production has not kept pace with growing demand for oil, resulting in increasing - and increasingly volatile - prices.” Warning that prices would almost certainly rise further, Bodman said: “In the absence of any additional crude supply, for every one percent increase in demand we would expect a 20 percent increase in price in order to balance the market.” German Economy Minister Michael Glos told the meeting: “The oil markets now need a strong signal from the production side.” An increase in production would be “a strongly needed signal to the financial markets to not gamble any more on an increasing oil price.” Kuwaiti Oil Minister Mohammed Al-Olaim said that OPEC members “will not hesitate” to increase production if the market needs it. But OPEC chief Khelil insisted there is enough oil to supply the market. “We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply,” he told a briefing. “Why would you have a supply problem when demand is going down?” he asked. Khelil said the 13-nation OPEC would only consider a production increase at a regular meeting in September. “We believe speculation, in its noble and not noble terms, has its impact,” the OPEC chief said. Khelil said much of the price explosion can be explained by currency market turbulence. “A lot of people are talking about the uncertainties about the reserves. But what about the uncertainties on the dollar?” British Prime Minister Gordon Brown called for a “new deal” between consumers and producers. But like many Europeans at the meeting he said production shortages and speculation had to be studied. Brown said that the world was going through “the biggest of all three oil shocks” in recent decades. Saudi Oil Minister Ali Al-Naimi said, however, that the world has enough crude to last “many decades” and that Riyadh will invest massively to be able to produce 15 million barrels a day. Al-Naimi said Saudi Arabia's production capacity will rise to 12.5 million barrels per day (bpd) by the end of 2009 and another 2.5 million bpd could be added if demand warranted. – With input from agencies __
