JIDDAH, Saudi Arabia — The U.S. energy secretary said Saturday that insufficient oil production, not financial speculation, was driving soaring crude prices.
Secretary Samuel Bodman’s comments on the eve of an energy summit in Jiddah set the stage for a showdown between the U.S. and conference host Saudi Arabia, which has largely blamed speculation in the oil markets for record prices.
The U.S. and many other Western nations have put increasing pressure on Saudi Arabia, the world’s top oil exporter, to increase production. Saudi officials have been hesitant to do so, arguing that soaring prices have not been caused by a shortage of supply.
Bodman disputed that assertion Saturday, saying oil production has not kept pace with growing demand, especially from developing countries such as China and India. “There is no evidence that we can find that speculators are driving futures prices” for oil, Bodman said.
He said commodities markets have experienced a huge influx of money from financial investors in recent years, but they have been following the market upward rather than driving the increase in the price of oil.
Saudi Arabia called the unusual meeting in Jiddah between oil producing and consuming nations as a way to show that it was not deaf to international cries that high oil prices have caused social and economic turmoil.
The kingdom increased oil production by 300,000 barrels a day in May, and a Saudi official confirmed Saturday that the country would add another 200,000 barrels a day in July.
CNBC said Saturday that Saudi Arabia’s current capacity is 11.3 million barrels per day, quoting a spokesman of the Saudi oil minister. Previous estimates by the International Energy Agency put current Saudi capacity at about 10.7 million barrels per day. The kingdom currently produces about 9.5 million barrels per day.
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