The Kingdom has achieved concrete steps in reducing the oil market volatility by holding the Jeddah Energy Meeting (JEM) on Sunday, bringing together around 3 dozens of countries representing both the producers and consumers. The conference was attended by Minister of Petroleum and Minerals Ali Al-Naimi; Prince Abdul Aziz Bin Salman, Deputy Minister of Petroleum and Minerals; Abdullah Al-Badri, Secretary General of Petroleum Exporting Countries; and Noe Yan Hulst, general secretary of International Energy Forum (IEF). Asked about the Kingdom's future intention of moving toward more saving of energy by removing fuel price subsidies in order to reduce the local consumption of fuel, Al-Naimi said authorities here are willing to apply the energy saving scheme but gradually.” We look forward to more alternative energy resources like solar which might reduce individual consumption of fuel,” he said. “I am convinced that the supply and demand balance and crude oil production levels are not the primary drivers of the current market situation and that markets are already well-supplied,” Al-Naimi said in a speech. “A simplistic focus on supply expansion is therefore unlikely to tame the current price behavior.” Most in OPEC share the Saudi minister's view. “Do not expect this problem to be solved in a day,” said OPEC President Chakib Khelil. The United States, the world's biggest energy consumer, agreed that it would take some time to tackle costly oil. “While increases in near-term oil production like the one Saudi Arabia offered today are welcome and necessary, fundamentally the market needs to see investments in increased long-term production capability and spare capacity,” US Energy Secretary Sam Bodman said in a statement after the meeting. OPEC next meets to reconsider its formal output targets in September. There is no consensus on the cause of high oil prices, for which there are many explanations. OPEC ministers have repeatedly blamed speculation and have argued a massive flow of investment funds, which has helped to boost oil and other commodities markets, should be controlled. Some consumers have said there could be an element of speculation but Bodman said the focus was misplaced. “There's no evidence we can find that speculators are driving futures prices,” he said. Consumers in Asia, including China, have begun to reduce subsidies, raising domestic fuel prices, which over the longer term could curb demand. Japan's Prime Minister Yasuo Fukuda sent a message to participants of the Jeddah Energy Meeting in which he expressed his concern about the serious effect of oil high prices on world economy. The message was conveyed through Japan's Economy, Trade and Industry Minister Akira Amari. In his message, Fukuda considered the meeting of oil producing and consuming countries held at the initiative of Saudi Arabia to be extremely important. “As the chairman of the G-8 Hokkaido Summit in July, I intend to thoroughly discus this issue taking into account the outcome of this meeting and send out a clear message to the international community,” Fukuda said in his message. Amari pointed out that global economy is likely to face a serious risk. “The situation in resource-scare developing countries is particularly serious. I have expressed a strong sense of urgency at January's Davos Conference and the International Energy Forum in April,” he said. He added that two weeks ago, at the G-8 energy ministers meeting which he chaired, all ministers shared serious concern over the current level of crude oil prices. “They agreed that the current condition is against the interests of both oil producing and consuming countries, and that energy policy makers must address the situation in a concerted manner,” he added. Amari called for having concrete measure both on the supply and demand sides. “On the supply side, oil producing countries should increase their production quickly in response to demand growth, and make clear their investment plans to expand spare capacity to meet greater demand in the future,” he said. “Investment needs to be increased. We need to ensure an open, transparent and effective investment climate regardless of whether you are an oil-producing or oil-consuming country,” he added. He said oil-producing countries should expand access to foreign investors in upstream development, and oil-consuming countries should streamline the licensing process for energy related investment. On the demand side, Amari, believed that oil-consuming countries are determined to thoroughly promote energy efficiency as a means of what he called “killing three birds with one stone”- namely energy security, economic growth and climate change mitigation. He called for analyzing the price information mechanism of crude oil as well as enhancing the transparency of crude oil future markets and speculative money. The Japanese minister concluded his statement stressing that the world is closely waiting for the outcome of this important meeting. “Now, it is time to take action, hand-in-hand, to live up to the expectations of the whole world,” he said. __
