June 22, 2008	Sunday	Jamadi-us-Sani 17, 1429

JEDDAH, June 21: At least 35 countries, 25 oil company CEOs’ and seven global energy organisations have come together in this Red Sea city, exploring ways to cool the overheated energy markets, as the energy summit gets underway here on Sunday amidst mixed expectations.

With conflicting push and pulls on the participants, expectations from the summit continue to remain mixed. Analysts continue to stay divided on the possible outcome, with some emphasising that the summit could well be the beginning of a new phase of intense energy diplomacy at the highest level, with more such gatherings in not too distant future.

King Abdullah convened the meeting, apparently in consultation with some of the world leaders, in the immediate aftermath of an unprecedented day of volatile trading that saw US crude go up by $11 barrel to a new peak in its largest ever one-day rise on June 6.

Consumers and producers till yet, have largely been involved in a blame game, accusing each other for the rally. When they met in Rome in April last, no consensus was seen even on the basic issue of what was causing the crude markets to boil. Consumers have been piling pressure on Opec to open the taps with producers resisting, arguing extra market forces to be responsible for the heat in the markets.

However, in recent days, there have been indications that Saudi Arabia may ultimately be ready to increase its output.

Signals emanating from other Opec capitals continue to be confusing, with most reacting coolly to the hints that Riyadh could announce at the conference boosting its output. Opec is insisting on a “solution” to end record oil prices and an examination of the role of speculators during the summit, the Opec’s secretary general is on record having said.

The issue of speculation and the high intensity of taxes on global fuel prices have regularly been pointed out as the making major contribution to the current scenario. And there seems to be an interesting relationship between the value of dollar and crude market prices too. Whenever dollar gains in value, oil prices slide and whenever the case is reverse, oil markets start creeping up. And indeed producers cannot be blamed for these.

Iran and Venezuela are clearly not in favour of any increase in output. Tehran has made it clear it would be opposed to any hike without a consensus from Opec members, dismissing the surge in prices as artificial. “The current rise in oil prices is not due to shortage in the market,” Hojjatollah Ghanimifard, international affairs director of the National Iranian Oil Company, was quoted as saying.

Ira’s Oil Minister Hussein al-Shahristani also appears of the same view: “I don’t think increasing any amount in the international market will have a significant impact on the prices.”

Libya has also reiterated that supply was not the reason for rising prices and questioned whether others in OPEC were able to add more oil. “I do not think there is enough spare capacity in other countries,” Shokri Ghanem, chairman of Libya’s National Oil Corporation, told Reuters.

And in the meantime, Kuwait’s Al-Shall Economic Consultants drew a pessimistic picture. “A fundamental change has taken place in the energy market ... Supply is controlling prices. The world is aware that the ability (of producers) for more oil supplies has become extremely limited,” it said in a recent report.

”Perhaps we are on the verge of a new era in which oil could lose its importance, exactly as coal did 100 years ago,” Al-Shall insist.

It would be thus naïve to expect that the one-day summit could resolve the complex issue to every one’s satisfaction. Even White House concedes there could not be an immediate impact on the crude market woes.

“There won’t be any immediate impact on prices. There are no short-term magic wand solutions, you’ve heard us say, on prices,” White House spokesman Fratto said.

“No one is going over there expecting that producers are all going to make commitments on increasing output. But we do want to take a look at how the markets are performing, help people to understand supply and demand.”

Others too seem to understand the scenario clearly. Realising the Jeddah summit would just be the beginning of the long and arduous process towards some sort of agreement, British Prime Minister Gordon Brown, to be himself present at the summit, told a press conference in London that he will present a British proposal at the meeting that calls for holding a follow-up conference if necessary at the level of the leaders and heads of governments and that he will be happy to host such a conference in London.

Leaders are in for some serious deliberation in Jeddah today on the crucial issue of future energy supplies at affordable prices. The world cannot afford another talk shop.