Agreements Elusive at Oil Meeting; Price Moderates

JIDDA, Saudi Arabia — A hastily convened global energy summit meeting led by Saudi Arabia ended largely in disagreement on Sunday, with only a modest pledge of increased production by the Saudis and no resolution on what other practical steps should be taken to ease the crisis over soaring oil prices.

On Monday, the global oil market shrugged off the news, pushing up prices. Oil was up $1.38 to settle at $136.74 in New York on Monday.

The Saudis, who considered the meeting a success because of the high attendance, announced a production increase of 200,000 barrels a day and an expansion of their output capacity if needed in coming years.

But news of the immediate production increase had already been absorbed by the world market for oil. Some experts had anticipated that the Saudis might announce a bigger increase.

Saudi Arabia, the biggest oil exporter, is the only country with the ability to significantly increase production quickly.

Rather than finding areas of agreement, participants in the one-day meeting in this coastal city on the Red Sea illustrated the sharply diverging views on what has caused oil prices to double in the last year to the $130- to $140-a-barrel range.

Consumer nations, led by the Britain, Japan and United States, see more supply as the answer to higher prices. But most producing nations are either reluctant to or unable to pump more oil, and they say a big reason for the price inflation is speculation. Everyone agreed that surging demand in the developing world was a major factor.

That point was punctuated last Thursday when China, the world’s fastest-growing consumer of oil, announced it was sharply raising the subsidized prices that its own citizens pay. The price of oil temporarily dropped more than 3 percent on that news alone because of expectations that demand from China would slow.

But the overall demand for oil by China, India and other rapidly developing nations, including many in the Middle East, is still expected to grow relentlessly, putting enormous pressure on producers to keep pace.

If anything, the Saudi summit meeting made plain the limited options available to push prices down.

For King Abdullah of Saudi Arabia, who called for the meeting just two weeks ago, it was an opportunity to show that his oil-rich kingdom was aware of growing anger and frustration caused by surging prices in oil-importing countries. It also reflected some alarm by the Saudis that the price inflation was causing consumer nations to look far more seriously at energy alternatives, which eventually could hurt the price of oil.

The crisis is also becoming a central issue in the American presidential race, where arguments over who is to blame for high oil prices echoed some of what was heard at the Saudi summit meeting.

President Bush has supported calls by Senator John McCain, the presumptive Republican presidential nominee, to allow for more drilling off the coast of the United States. Senator Barack Obama, the presumptive Democratic nominee, opposes more offshore drilling and has called for a crackdown on market speculators, whom he blamed for pushing up prices.

The question of whether speculators are influencing prices is expected to get closer scrutiny this week in Washington, where a Senate committee led by Senator Joseph I. Lieberman, the Connecticut independent and former Democrat who supports Mr. McCain, will hold hearings on the price swings in the crude oil market.

The oil summit meeting here was attended by energy ministers from 35 nations, who convened in a vast ballroom and listened as King Abdullah said he understood the pain that $140 oil was causing.

But King Abdullah and Prime Minister Gordon Brown of Britain, who walked into the high-ceilinged hall together as a military band played, soon offered totally different perspectives on the problem.

The king spoke of the “selfish interests“ of speculators as a primary reason and urged the gathered ministers to “rule out biased rumors“ and to “reach the real causes for the increase in price.“

But Mr. Brown pointed to fundamental economics and “oil demand rising faster than supply.“ The American energy secretary, Samuel W. Bodman, put it more bluntly in a meeting with reporters, saying, “There is no evidence we can find that speculators are driving futures prices.“

Both sides spoke about the need for compromise, with Mr. Brown calling for a “global new deal“ that would allow a “greater commonality of interest“ between consumers and producers, including greater freedom to invest in one another’s markets.

But asked how all this would help remedy the worst oil crisis in decades, some ministers seemed baffled and uneasy. [Read More]