Unity in opinion - oil price is too high
High prices of oil are caused by the insufficient volumes of production, by the speculation in the oil market and heavy taxes and duties, and one of the measures, which can lead to reduction in the prices of the energy resources can be an increase in the volumes of oil production. Such conclusions were made by the participants in the summit of the most important producers and users of oil who came together during the day off in the Arabian city Jidde of. The International conference, which took place due to the call of Saudi Arabia, was attended by the representatives of nearly 35 states, more than 25 most important worldwide oil companies and seven international organizations, including International Energy Agency and the International Monetary Fund. They discussed an increase in the world oil prices and searched ways of the stabilization of the oil market.
The large world oil producers and consumers recognized that the fuel prices that have reach now almost $140 per barrel are too high. "Those that we here mean are the acknowledgment of the fact that the prices of oil are too high," stated the Prime Minister of Great Britain, Gordon Brown, who participated in the conference of energy-powers. "The importance is that the producers say that the present prices of oil bring serious damage and that the present prices excessively high," he added.
Despite strong intra-day fluctuations, during the recent two weeks, the oil price remained in the range of $130-137 per barrel. Amongst the basic factors, which affect dynamics of quotations, the analysts highlight fears on oil deliveries caused by the geopolitical shakings, the expectations of reduction in the demand for it and the oscillations of the dollar rate, which lead to abrupt changes in the moods of investors. certain decrease.
The Energy Minister of Australia, Martin Bartensteyn, considers that a price hike of oil is caused by speculations in the oil markets. He thinks they were artificially inflated. He stated: "I consider that the only method to attain reduction in the prices of the energy resources is to increase oil supplies to the market and reveal speculators. Thus, we will be able to reduce prices". Giving a speech at the conference, the US Energy Secretary, Samuel Bodman, noted that the growing oil demand anticipates oil production, and this led to the jump of an increase in the oil prices in the world and the instability in the oil markets. However, according to the Minister of oil and Mineral Resources of Saudi Arabia, Ali Ibn Ibranimi An-Nuaymi, there is enough oil proposal in on the markets and the increase in the oil prices is caused by other reasons.
Nevertheless, as the largest oil producer in OPEC Saudi Arabia made a decision to increase oil production. The initiator of conference - the king of Saudi Arabia, Abdallah Ben Abdel Aziz, stated that his country will do everything depending on it in order to convince members of OPEC of permitting increasing oil production and thus, reducing prices of the energy resources "Over the last several months, we increased the volume of daily oil production from 9 to 9.7mln barrels," said Abdallah during the opening of conference. According to monarch, in this case, Saudi Arabia is ready also in the future to satisfy the additional oil demands. According to the Minister of Oil and Mineral Resources of Saudi Arabia, Ali An-Nueymi, in spite of the position of OPEC, his country will make a decision to increase production up to 12.5mln barrels per day.
It should be mentioned that the ministers of G8 countries also called the oil exporting countries to increase the level of their production in order not to allow further increase in the prices. Meanwhile, per day, 80 million barrels of oil are produced in the world, and as experts note that the oil producers hardly can substantially increase this index and break the tendency of non-reduction in the oil prices. Thus, sequential chairman of OPEC, Minister of Energy and Mining Industry of Algeria, Shakib Khelil stated on June 20 that the call of some oil consuming countries to increase the oil production of OPEC appears "illogical and irrational". Khelil emphasized that the reason for an increase in the prices of the crude oil is not at all a drop in the oil production. He noted that in only 40 percent of entire world oil production falls on OPEC, and the USA, Norway, Russia and other some large oil producing countries they are not members to OPEC. In reality, large-scale speculations in the International oil markets, tension in the geopolitical situation and shortages in the oil-refining capacity are the basic factors, which led to a sharp increase in the oil prices. Furthermore, Great Britain, France and some other large countries assemble too heavy taxes to the fuel, which also contributes to an increase in the oil prices.
The large oil consumer, China, was represented at the conference by the Deputy Chairman of Chinese Peoples' Republic, Si Tszinpinom. He presented the view of Chinese Government regarding the problems with the energy resources, which is based on the principles of mutually advantageous cooperation, development of alternative energy sources and also nmecessaty of coordinating its actions. Si emphasized that China adheres to the way of scientific development, economical and safe development, carries out long-term energy strategy. In the development of power engineering, China invariably observes these principles: to economize energy, independently develop the alternative energy sources, with the support of science and technology, protect environment, realize mutually advantageous cooperation. It should be noted that China with its increasing consumption is today one of the major factors, which determine oil prices in the market.
As a result of the conference, a communique was published, which calls on the oil producing and consuming countries to combine efforts and take practical and effective measures for the stabilization of international oil market. In the communique it is indicated that the corresponding sides expressed "concerns" with the 'hostile' increase in the oil prices, caused by different factors, and they consider that the stability of the International oil market relates to the common interests of all sides. Besides this, the communique also calls to strengthen control over the market for futures transactions with the oil, increase transparency on the oil markets, activate the production of crude oil and put large investments into the sphere of the application of the renewed energy sources.
The decision of Saudi Arabia to increase its own oil production by 200,000 barrels in June, which was declared during the international energy forum was expected, and therefore, it did not have strong influence on the market. The technical potential of market for continuing the increase in the oil prices of oil on June 23 remained sufficient because over recent two commercial days, the market yet entirely did not win back the previous drop in the prices. Let On June 19 the oil prices feel during day by averagely on $4.6 per barrel, but in the recent two commercial days, price grew by averagely $4 per barrel.
This means that the world in the near future waits further increase in the oil prices of oil because such problems are not solved at once. Yes even the forecasts of the International Monetary Fund (IMF) speak about the retention over the visible long term for high prices of oil.
According to official representative of the Fond, David Holi, high oil demand in the world remains steady because of rapid economic growth in the developing markets headed by China and India. According to the specialist, the entire additional demand for the last two years fell precisely on the group of countries with the forming markets.
Financiers of G8, the leading world powers, at the last conference charged the IMF (International Monetary Fund) and international energy agency to be dismantled with the reasons for an increase in the prices. In the IMF there is a special working group on the prices of the foodstuffs and energy resources. Its work comes to the end, and the results will be soon reported to the IMF Board of Directors.