RIYADH/DUBAI (Reuters) - Leading exporter Saudi Arabia has summoned consumer nations and fellow producers to an urgently convened meeting to thrash out a solution to oil prices it says are unjustifiably high.
Producers and consumers have long blamed each other, but the Saudi cabinet, chaired by King Abdullah, issued instructions to bring them together after oil rose by an unprecedented $16 a barrel over a little more than 24 hours to more than $139.
Representatives of the two sides met in April in Rome, where they failed to even agree the price was too high, although it was then around $20 below current levels.
The oil exporters say supplies are adequate and are not the cause of high prices. They too do not want to see fuel costs hurting the economy.
They also say a massive flow of investment funds, which has helped to drive oil and other commodities higher, should be tamed.
“The kingdom is genuinely concerned and wants as many stakeholders as possible to get involved and make some serious proposals for regulating speculation,” an industry source said.
Banks such as Goldman and Morgan are prominent among those saying oil market fundamentals are a key factor in rising prices, sending a bullish message to the oil market.
Goldman raised its oil price forecast in May, the very day that Saudi Arabia said it would raise supply. The Goldman forecast drowned out the Saudi signal to the market and pushed the price to what was then a record.
It could take more than a meeting in the Red Sea city of Jeddah to convince investment banks that fundamentals are not bullish.
Investors, who buy into the oil market for the long term, are betting supply will struggle to meet demand for years into the future. They have never admitted their activity has artificially inflated the price.
Consumer governments, wary of unpopularity at home and trying to contain protests over rising prices, are also reluctant to shift their views.
U.S. Energy Secretary Sam Bodman, who will attend the meeting, said on Wednesday the world’s largest consumer has a difference of opinion with Riyadh over high oil prices.
“The issue is we have a difference of opinion,” Bodman said. “The reason we’re looking at these very high prices for oil is strictly supply and demand.”
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