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 $1.57, to $136.93 a barrel, in New York at noon.
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.
“Let me ask you,“ said India’s petroleum minister, Murli Deora, when a group of reporters asked him for his views, “what else can we do to bring harmony between buyers and sellers?“
Despite the urgency that brought hundreds of participants here, Jeroen van der Veer, the chief executive of Royal Dutch Shell, summarized the difficulties faced by oil producers in dealing with record prices: “There are no overnight solutions.“
King Abdullah also called for OPEC, the oil cartel, to pledge $1 billion to help developing nations deal with the effects of soaring energy costs, to which the Saudis would contribute an undetermined share. He also offered an additional $500 million in loans from Saudi Arabia.
Beyond that, participants called for both more transparency and more regulation in energy markets, more investments in both production and refining capacity, and more cooperation between producers and consumers.
While it is reaping record profits, Saudi Arabia is growing increasingly concerned that current oil prices might eventually dampen economic growth around the world and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices could make alternative fuels much more viable and threaten the long-term prospects of the oil-based economy.
Japan’s minister for economy, trade and industry, Akira Amari, made some sharply worded comments on that subject, warning that steep increases in the price of oil were already leading to greater energy efficiency and to the introduction of alternative fuels. He called these “natural self-defense measures“ that would “inevitably reduce the revenues of oil producing countries in the medium- to long-term.“
To ease fears over the supply of oil, a crucial factor behind the rally in prices, Saudi officials said the kingdom would be able to increase production capacity in the coming years. The Saudi oil minister, Ali al-Naimi, said that Saudi Arabia would be capable of adding an additional 2.5 million barrels a day to its output beyond the current expansion plans the kingdom is completing.
Saudi Arabia is increasing its production capacity to 12.5 million barrels a day in a $90 billion expansion plan that is scheduled for completion next year. Beyond that, Mr. Naimi said, oil experts in the kingdom had identified additional opportunities to expand production, if needed, to 15 million barrels a day in future years.
Mr. Naimi said this additional capacity would be used only “if and when crude oil demand levels warrant their development.“ He used the same language in saying the kingdom could add even more than the new 200,000-barrels-a-day increase in the short term.
The Saudis have already said they believe current demand is being met, despite the high prices — suggesting that high prices alone might not be enough to warrant the increase in supply.
Saudi Arabia has already increased its daily production by 300,000 barrels, or about 3 percent, to 9.45 million barrels. But that has had little impact.
“There is a very clear difference of opinion on key issues underpinning the high price of oil,“ said Raad Alkadiri, an energy analyst at PFC Energy, a consulting firm, who was present in Jidda. “It’s not clear that anything you heard today is going to reverse sentiment. One thing is clear: You are not going to wake up tomorrow and find that oil prices have dropped 20 or 30 dollars.“
Strike Against Chevron in Nigeria
LAGOS (Reuters) — Nigeria’s senior oil workers’ union began strike action at the energy giant Chevron on Monday but said it had not yet shut down any production, pending further talks with the government.
“A limited form of protest has started but we have not yet gone deep,” Lumumba Okugbawa, deputy secretary general of the union, told Reuters. “We have not shut down the oilfields, but administrative functions are affected.”
He said union representatives will travel to the Nigerian capital Abuja for talks with the federal government about the dispute, after negotiations with Chevron management reached deadlock.
Chevron confirmed that union members had declared a work stoppage but said it was “continuing to engage all the stakeholders” through dialogue.
“It is still too early to comment on any potential impact of the declared work stoppage on our operations,” Chevron spokeswoman Margaret Cooper said.
Chevron’s output from Nigeria is around 350,000 barrels a day, of which its equity share is around 129,000 barrels a day. A strike could further cut Nigeria’s production, already driven down by militant attacks on oil operations.
The oil minister,Odein Ajumogobia, said on Sunday that Nigeria was producing around 1.8 million barrels a day before the most recent attacks, less than two-thirds of its output capacity.
