Saudis call for meeting to discuss energy prices

The Saudis are concerned that high prices will slacken demand in the long run.

RIYADH, Saudi Arabia (AP) — Saudi Arabia will call for a summit between oil producing countries and consumer states to discuss soaring energy prices, Information and Culture Minister Iyad Madani said Monday.

The kingdom will also work with OPEC to “guarantee the availability of oil supplies now and in the future,” the minister said after the weekly Cabinet meeting, held in the seaport city of Jiddah.

Madani said that the kingdom has informed “all oil companies it deals with as well as countries that consume oil that [the kingdom] is ready to provide them with any additional oil they need.”

“The Saudi Cabinet has instructed Oil Minister Ali al-Naimi to call for a meeting in the near future that will include representatives of oil-producing countries, consumers and companies that work in extracting, exporting and selling oil to look into the price hike, its causes and how to deal with it,” said Madani.

The Saudi announcement comes just three days after the biggest single-day price leap ever, when oil surged more than $11 to surpass $139 per barrel.

Retail gas prices rose further above $4 Monday in the United States, the world’s largest oil consumer.

The kingdom will work to ensure there will be no “unwarranted and unnatural oil price hikes that could affect international economies, especially those of developing countries,” said Madani.

“There is no justification for the current rise in prices,” he said.

On Monday, light, sweet crude for July delivery fell $4.18 to $134.36 a barrel in volatile trading on the New York Mercantile Exchange.

“It’s not a situation that’s going to move the market today,” said Phil Flynn at Alaron Trading Corp. in Chicago, suggesting that there it might have a more long term effect. “I do think a conference is warranted, we need to sit down.”

Jim Ritterbusch, president of the U.S.-based energy consultancy Ritterbusch and Associates cautioned that such meetings have taken place in the past and could be more an effort to calm the market without taking concrete measures.

“It’s not anywhere near as significant as if they called an emergency OPEC meeting,” he said. “It seems to me to be more political than anything. ... They’re reaching their worry threshold.”

The Saudis are concerned that sustained high oil prices will eventually slacken the world’s appetite for oil, affecting them in the long run.

Energy experts say most producers have little ability to expand output. The exception is Saudi Arabia, which is producing about 9.4 million barrels a day and has the ability to increase production by about 2 million barrels a day, but has not done so.