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Oil prices soar as leaders gather for Saudi Arabia summit

Oil prices soar as leaders gather for Saudi Arabia summit 

By Russell Hotten, Industry Editor

Last Updated: 11:55pm BST 20/06/2008



Oil prices surged as some members of the Opec producers’ cartel rejected demands to increase output ahead of tomorrow’s meeting in Saudi Arabia to discuss soaring fuel costs.

  World leaders are to gather in Saudi Arabia to discuss the soaring price of oil
The summit in Saudi Arabia will discuss opening up Middle East oilfields to energy majors such as BP

The president of Opec, Chakib Khelil, said yesterday that it would be “illogical and irrational” for it to increase output. 

On Thursday oil prices fell sharply – around $5 a barrel – after Saudi Arabia announced a production hike of 200,000 barrels a day and China increased fuel prices by dropping subsidies. 

But yesterday, New York’s main oil futures contract, light sweet crude for July delivery, jumped $4.27 to $136.20 a barrel at one stage and in London Brent North Sea crude for August rose $3.46 to $134.46.

Mr Khelil said: “To ask the oil producers to increase their output is illogical and irrational… just because computer or car prices were high, would one ask their producers to make more?”

Venezuela initially refused to attend the meeting, but energy minister Rafael Ramirez reportedly changed his mind at the last minute after blaming speculators and the falling dollar for the high prices. Meanwhile, Iran said raising output would not curtail prices.

Saudi Arabia, the world’s largest producer and the de facto leader of Opec, called the summit in the hope of easing the strains on consuming economies caused by soaring oil prices.

In what appeared to be a mistake on Thursday, the country’s London embassy website said it was boosting its daily oil output by 200,000 barrels. The statement was later withdrawn and it was thought the release was intended for tomorrow.

Prime Minister Gordon Brown, America’s energy secretary Sam Bodman and senior ministers from other countries, including China, will be at the Jeddah summit.

Jeroen van der Veer, chief executive of Royal Dutch Shell, and Tony Hayward, his opposite number at BP, are among the senior businessmen attending.

The summit will also discuss opening up Middle East oilfields to energy majors like BP, and foreign investments from sovereign wealth funds in the Gulf.

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