Saudi Arabia to convene a summit of energy producers and consumers on June 22 in Jeddah; EIA predicts that energy prices to remain high
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  • The Saudi Arabian government is set to convene a summit-level meeting of oil producers and consumers on June 22 in Jeddah. The decision was taken in a cabinet meeting headed by King Abdullah. The move is seen as an attempt to address the spiraling oil prices, which Riyadh described as “not justified in terms of market fundamentals.” Iyad Madani, the kingdom’s information minister also asserted that Saudi Arabia would work with other OPEC members to “guarantee the availability of oil supplies, now and in the future1.”

    While experts believe that a concerted action by consumers and producers will do little to nip the price rise, it did lower the spike in prices witnessed in the previous week. Oil futures fell by $4.19 on Monday to close at $134.35 a barrel. The fall however was short-lived as crude oil in New York trading jumped $5.49, to $136.80 a barrel, immediately after the release of the American crude oil inventory data, but settled at $136.38 by June 112. ABC News reported that if Saudi Arabia were to increase oil production by another one million barrels per day, it would trigger mass selling of oil contracts that would push the prices down. While Saudi Arabia has not announced any such decision, some analysts believe that $134 a barrel of crude oil is a breaking point which could push the Kingdom to release more oil so that prices come down and which would also prevent a possible turn towards other fuel sources3.

    Meanwhile, the latest brief released by the Energy Information Agency (EIA) notes that oil prices were expected to remain high, averaging $126 per barrel next year. The IEA expects oil to drop to $86 per barrel in 2010 and bounce back to $107 by 20154.