Summit fails to halt runaway oil prices

GORDON BROWN can add last week's Jeddah oil summit to his ever-growing list of policy failures. The Saudi Arabia-held conference was supposed to see Britain's hapless prime minister persuade the oil producing OPEC countries to significantly increase their production, easing the price of fuel at the filling stations.

Simon Carter

Instead, US light crude jumped to $137.50 a barrel on Monday morning (23 June). On 24 June, it rose yet further, reaching $138 a barrel, just $2 off the all-time record high. This will continue the misery for ordinary consumers while making billions in profits for oil producing countries and western oil companies alike.

Western oil consuming countries, such as the US, UK and Australia have repeatedly blamed the high price of oil on OPEC states holding back production. OPEC countered by blaming speculators for record oil prices (with some justification, as oil prices are inflated by as much as 100% - see Oil Price Shock in The Socialist, Issue 537).

Saudi Arabia, the world's largest producer, has announced a further increase in production on top of an increase last month. However, this will make little difference to world supplies as violence in Nigeria has disrupted supplies from there. Moreover, Israeli military exercises - reportedly a dry run for bombing Iran's nuclear facilities - have increased speculation in oil markets, keeping prices high.

It seems that the high price of oil - which has prompted riots and protests across the western world - will only significantly fall back when an oil-price affected world economic recession kicks in.