Global Competitiveness Forum (GCF) CEO Abdulmohsen Albadr said lower oil prices will not hamper the Kingdom's plan to build six multi-billion dollar economic cities by 2020. However, oil prices rose 5 percent on Monday as Israel's deepening incursion into Gaza and a dispute between Russia and Ukraine over natural gas heightened fears of supply disruptions. US crude gained $2.47 to settle at $48.81 a barrel after touching a three-week high of $49.28. London Brent rose $2.40 to $49.31 a barrel. Oil prices have risen from around $35 a barrel since Israel launched its Gaza offensive on Dec. 27, heightening fears of possible disruptions of crude supplies from the Middle East. World oil prices fell by about 54 percent in 2008 as a sharp global economic slowdown weighed on energy demand in the second half of the year. However, in the first half, crude futures rocketed to record highs of above $147 a barrel in July on fears of supply disruptions. Toward the end of 2008, prices slumped to above $33 - the lowest in four and a half years. Crude oil had begun 2008 by vaulting above $100 for the first time as traders worried about violence in oil exporter Nigeria and supply problems in the key US energy market. Continued geopolitical tensions then saw oil rocket above $120, $130 and $140 on their way to setting all-time highs by mid-year. The six Saudi economic cities currently under construction will contribute $150 billion to GDP growth and will create 1.3 million jobs, it is estimated. Albadr said on Monday that though the Saudi budget for 2009 will have a deficit of around SR65 billion ($17.3 billion), it “will never affect the debt of the country because the surplus we made in 2008 will sustain our spending on infrastructure.” He stressed there would be no delay or cancellation of the cities and they will proceed as planned. The Kingdom was expected to post a record surplus last year of SR590 billion. King Abdullah, Custodian of the Two Holy Mosques, announced in November a $400 billion investment and development program over the next five years. The GCF, hosted by the Saudi Arabian General Investment Authority (SAGIA) which is marketing the cities, takes place at the end of the month in Riyadh. Some 1,500 delegates, including business leaders and international politicians such as Airbus CEO Thomas Enders and Carlos Ghosn, CEO of Renault and Nissan, will attend the three-day GCF summit. Crude futures have been boosted over the past week as the conflict in Gaza stokes tensions in the key oil-producing Middle East. The Gaza conflict has added to the “geopolitical risk premium embodied in the oil price,” said David Moore, an analyst at Commonwealth Bank of Australia. Iran's OPEC representative Mohammad Ali Khatibi on Monday said that the oil producers' cartel would hold an extraordinary meeting in Kuwait in February. “The extraordinary meeting of the Organization of Petroleum Exporting Countries is due to be held next month in Kuwait,” Khatibi was quoted as saying by state television. “The exact date has not been fixed yet and no invitation has been sent to the members either,” he added in a statement posted online. OPEC last month agreed to cut output by 2.2 million barrels per day in a bid to shore up crude prices.
