(AFP) – Jun 16, 2008
SINGAPORE (AFP) — Oil prices eased on Monday after the United Nations chief said top OPEC crude producer Saudi Arabia had agreed to increase production and did not want to be blamed for the impact of soaring prices.
New York's main oil futures contract, light sweet crude for July delivery, was 96 cents lower at 133.90 dollars a barrel.
The contract closed at 134.86 after shedding 1.88 dollars on the New York Mercantile Exchange on Friday.
Brent North Sea crude for August delivery was 71 cents lower at 134.40.
Prices have soared since breaking through the 100-dollar level at the start of the year. They hit all-time highs of 139.12 in New York and 138.12 in London on June 6.
Global finance officials fear high oil prices pose a threat to world economic growth, while truckers and others in Europe and Asia have held protests over the rising cost of fuel.
UN Secretary General Ban Ki-moon, after a weekend visit to Saudi Arabia, said Saudi Oil Minister Ali al-Nuaimi told him Riyadh would raise production by 200,000 barrels a day in July on top of a hike of 300,000 barrels made in June.
"They will respond positively whenever there is a request from their customers, so there is no shortage," Ban said. "They don't want to be blamed."
Ban quoted al-Nuaimi as saying that he felt oil-consuming countries should also play their part to stabilise prices by bringing down national taxes and combating speculators.
Ban said this was why the Saudis, the largest producer in the Organisation of the Petroleum Exporting Countries (OPEC) cartel, were hosting a high-level meeting of oil producers and consumers in Jeddah next Sunday.
"The Saudis look ready to increase production," said Victor Shum of Purvin and Gertz international energy consultancy in Singapore. "That's rumoured to be announced at this meeting in Jeddah."
Saudi Arabia pumps 8.48 million barrels per day, according to the International Energy Agency, a policy adviser to major industrialised countries.
"I think the expected increase in Saudi oil output will temper the market sentiment some," Shum said.
But he said any increase in output will come from the already-limited spare production capacity of OPEC.
That limited capacity, available in case of a real emergency, has been a key factor in driving the price rally, meaning the longer-term impact of any output increase could be minimal, Shum said.
World finance leaders who met in Japan over the weekend warned runaway oil prices could imperil global economic growth. They urged producing countries to hike output and invest money to ensure they can pump enough supply in future.
Analysts said the Group of Eight (G8) -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- also sent a warning signal to oil speculators by highlighting the inflation threat to the global economy.
Some analysts have cited the role of speculators or short-term traders, who have moved their money into commodities, in recent price volatility.
The International Monetary Fund said it would investigate the surge in crude oil costs but Shum said he did not expect the comments of the G8 ministers to have much impact on prices.
"It's a case of officials, politicians, looking for a scapegoat," he said.
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