Pressured primarily by the USA and European states and with a view to trying to calm the volatile market, Saudi Arabia , the world's biggest oil producer, hosted an emergency oil meeting of oil producing and consuming nations, known as the OPEC, in Jeddah on June 22 to discuss soaring oil prices. Amid concerns that recent record oil prices are helping tip the US and other major economies towards recession, energy ministers from more than 30 countries, as well as senior executives from the world's largest oil companies, attended the conference in the city of Jeddah. The meeting took place amid fears that recent record oil prices are helping tip the US and other major economies towards recession and against a backdrop of protests against rising fuel costs around the world. However, oil prices fell by almost $2 last week after reports that Saudi Arabia might boost oil production. But, price rebounds to over $136 Oil prices hit a high of $139.12 on 20 June.

Oil prices keep rising. A report has warned that, like the case in the prices of all other items, the price of crude oil, could soar to $200 a barrel in as little as six months, as supply continues to struggle to meet demand, Specialists made the warning as benchmark US light crude passed the $123 mark for the first time. Oil prices have now risen by 25% in the last four months and 400% since 2001. US sweet, light crude hit an all-time peak of $123.53 (£63.25) last week, while London Brent crude jumped to $122.32.

Oil prices hit a high of $139.12 on Friday. US light, sweet crude rose to $136.74 a barrel in New York , while in London , Brent crude was $136.09 a barrel. Oil prices have been particularly volatile recently. Earlier in the day, prices were close to $132 a barrel. When the US currency strengthens the price of oil becomes more expensive to overseas investors.  It is argued that global oil production barely rose last year despite record prices and high demand. If anything, the growth in China 's oil demand has been slowing down.There have been fuels protests in many countries, including Spain , Portugal , India and Malaysia . The International Energy Agency (IEA) said: "The prices are not sustainable and jeopardize economic growth globally and the impact was "especially acute in developing countries".

Efforts to control the price received a further blow, following attacks on Shell and Chevron facilities in Nigeria which cut the country's production by more than 300,000 barrels a day. Crude oil prices have risen $5 to more than $136 a barrel, because of concerns that a possible strike by oil workers in Nigeria may disrupt supply. Consumers are calling on producers to increase refinery capacity, which limits the amount of oil that can be shipped. A union representing Chevron workers in Nigeria , Africa 's biggest oil producer, has renewed a strike threat.

Meanwhile, under pressure from the USA , the UN Secretary General Ban Ki-Moon met Saudi Oil Minister Ali al-Naimi in Jeddah for talks on the high oil price and announced that Saudi Arabia will increase its oil production by 200,000 barrels a day in July in a move to meet growing world demand. After an earlier meeting with the Kingdom's King Abdullah, Ban said Saudi Arabia , the world's biggest oil producer, viewed current prices as "abnormally high". Last month, the Kingdom increased its production by 300,000 barrels a day. Ban said Saudi King Abdullah acknowledged that the current oil prices are abnormally high due to speculative factors and some other national government policies and he is willing to what he can to bring the price of oil to adequate levels.   

The Meet:  Saudis face oil pleas

Feeling the heat of western pressure tactics, Saudi King Abdullah Bin Aziz said the world's largest oil producer had recently raised output by about 500,000 barrels a day in an effort to calm worries over supply shortages. King Abdullah proposed OPEC members contribute $1bn to a fund, under the auspices of the World Bank, to help poorer countries deal with spiraling energy costs. Saudi Arabia would also offer $500m in loans to countries struggling with fuel shortages to promote energy projects.

The US , UK and other consumers urged producers to boost supply, blaming lack of capacity for the recent price surge. British Prime Minister Gordon Brown, who attended the Jeddah meeting, has called for a "new deal" on global energy supplies to benefit both consumers and producers. Brown sought energy for leading oil producers to raise production to try and bring down soaring and said more production was needed to ease price "uncertainty" and "volatility". As if representing the entire Commonwealth of former British empire, Brown said: "I'm going to make it absolutely clear that we are going to reduce our dependence on oil by investing in nuclear and renewables, I want the oil-producing countries also to diversify out of oil and I want us to get a more balanced energy market, We're living through the third big oil shock in 30 years. Oil prices have trebled in every country of the world, People who use oil are feeling the pinch, and it is hitting people's standards of living very heavily. He also called for "enhanced co-operation" in efforts to reduce global dependence on oil in the long term.

The Saudi oil minister said current  elevated oil prices - which hit a record high of more than $139 (£71) a barrel last week - were unjustified. Oil minister Ali al-Naimi said a meeting of oil exporters and importers to be held in Jeddah later this month would seek a solution to the unprecedented high prices, the Saudi state news agency said. The Kingdom is hosting an international gathering of oil producers and consumers in a week's time.

Better information was need on the current state of global oil supplies and future demand, while oil producers must diversify beyond oil by investing in other sources of energy. OPEC president Chakib Khelil insisted that the price of oil was "disconnected from fundamentals" of supply and demand while Qatar 's Energy Minister Abdullah Al-Attiya said the world was not facing an oil supply crisis. Some say that recent increases in output by OPEC members are unlikely to have much of an effect on the price, given that the world's daily oil production is about 80 million barrels.

Saudi oil output to rise in July

USA claims market fundamentals show that production has not kept pace with growing demand for oil, resulting in increasing prices and increasingly volatile prices.

On the eve of the conference, US Energy Secretary said prices are too high at present, while rising demand, especially from developing countries was growing faster than supply, affecting the future forecast of the energy position world wide and he said like China and India demand too much of oil.  

The Saudis had raised production by 300,000 barrels a day in May, and are widely reported to be preparing a further rise of 200,000 barrels a day in July. The US and other Western consumers have urged oil producers to boost supply, blaming lack of capacity for the recent price surge. Top world supplier Saudi Arabia has made slight increases but says market speculation, not lack of supply, has driven prices to nearly $140 a barrel. Several nations have faced protests as rising fuel costs have hit industries and helped push up food prices.  

Oil speculators

Saudi Arabia and other members of the OPEC producers' body rightly blame the soaring price, which has risen from about $10 a barrel to nearly $140 in the space of a decade, mainly on market speculators and high taxes. Saudi Arabia is under international pressure to increase output. Saudi Arabia had raised output recently and blamed speculation, rather than any shortage of crude oil or lack of supply, on the rise in prices. Saudi kingdom is the only oil producer with the ability to pump substantially more crude.

Ahead of the summit, Saudi assistant petroleum minister, Prince Abdulaziz bin Salman, said supply could rise further: "We will meet demand. But other oil producing countries have little spare capacity to boost output.   Saudi Arabia and countries from OPEC - the Organization of Petroleum Exporting Countries - resist this interpretation, blaming the soaring price, which has risen from about $10 a barrel to nearly $140 in the space of a decade, on market speculators. OPEC president Chakib Khelil insisted that the price of oil was "disconnected from fundamentals" of supply and demand, according to French news agency, AFP. But, in an apparent contradictory signal, Kuwait oil minister Mohammed al-Olaim was quoted as saying OPEC members "will not hesitate" to increase output if the market requires it.

A Word: Prices do go up

The truth is probably many factors have played a role in the price rise. World, chaired by the US-led west and its so-called strategic partners form the East, seem to find ways to confront the Islamic world. "Terrorism" has done a major morale boosting job for these nations to present themselves as "decent democracies".  Now the issue oil price rises being taken up as a serious issue, while pieces of all other commodities have shooting up equally every where. We are going to have to live with high prices- that is how an oil price specialist commented, but that is true of all other commodities, including gold, silver and other special items used by middle class in third world, especially in India , though none raised this issue in the proper perspective. Despite the recent volatility, the future trend is for even higher prices.

USA and its allies don't want to drill and make use of their own energy sources possibly for reasons of pure politics. West argues too well that the supply of oil hasn't kept up.  There's no shortage of explanations for the record rise in oil prices. That's why many rightly blame speculators for the price rise - investors in the market betting that prices will keep on going up. Still others say it's down to oil producers deciding they'll make more money by keeping the oil in the ground than by digging it up. But Saudi keeps raising its oil production in a sustained manner.

Saudi Arabia could announce a further increase in supplies shortly but that it was naive to assume this would bring global prices down soon. The speculators are identified as being the major root cause of the trouble. And the oil market probably has got bit ahead of itself. In a more global economy, there's going to be tougher competition for every thing, including oil supplies.