Bush To Press Saudis on High Oil Price

One of the world's top leaders, the US president Bush, travelled the Middle East for some reasons. One of which is to discuss with Saudis the threatening effects of oil high prices not only to US economy but to the world as a whole. Will Saudis respond to Bush's call?

The president's Mideast trip will celebrate America's close ties with Israel on the occasion of the 60th anniversary of the Jewish state, and will highlight US cooperation with its Mideast allies in the fight against global terrorism.

Bush was to meet with Israeli President Shimon Peres and Prime Minister Ehud Olmert in Israel before heading to Saudi Arabia for talks with King Abdullah.

more...

On High Oil Price: Saudi Have Fears

Saudi Arabia, one of the leading oil reserves in the world, has benefited the sky-high oil price, since it has a positive impact on its economic development. But, high oil price is also a threat to its economic development. Why? simply, because high oil price could hasten the development of renewable energy that might displace petroleum of Saudi Arabia.

Still, some leading energy and Middle East experts perceive a Saudi shift towards greater acceptance of high prices amid surging demand from China and other developing economies. Next to these new sources of demand there is diminished concern about high prices creating greater incentives for competing sources of energy.

"Many years ago, before the demand side of the equation became so dominant, the view that if prices were lower, alternatives could not survive was accepted," said James Oberwetter, former U.S. ambassador to Saudi Arabia. "But the dawning of these huge new markets has really dimmed the prospect for lower prices."

more...

Oil May Go Up $250, Expert Says

Oil has lower down to $112 per barrel, as the US dollar gains back strentgh. But there are reports, especially that of the oil experts that oil may go up at $250 per barrel. Oil rich countries can ease the problem since they are the major suppliers of oil worlwide. But why can't they boost oil production?

A Bloomberg report also quoted information provider Global Insight as projecting that crude oil could peak in the US at $135 a barrel in the next two months. Oil might rise to $135 as the declining dollar draws investors seeking a currency hedge, before new supplies see prices fall, Global Insight’s Simon Wardell was quoted as saying.

And in the meantime, OPEC president Chekib Khelil too has joined the chorus, hinting at significantly firmer crude markets in the near term. Projecting that oil prices could even hit $200 a barrel, Khelil blamed weakness in the dollar and global political insecurity for the current market woes. Establishing a direct relationship between the sinking dollar and the ascending crude prices, Khelil claimed that with the dollar losing one percent of its value, oil prices rise by $4 a barrel and vice versa.

more...

Al Naimi: No Need for Oil Capacity Expansion

Saudi Oil minister Ali Al Naimi once again said that Saudi Arabia has no plan to expand its oil capacity, despite escalating demands for oil supllies and rising alternative fuel supplies. The long term oil demand is seen falling, the reason why Al Naimi has to say no to oil capacity expansion.

The price of oil was divorced from oil market fundamentals, Al-Naimi said. Oil has become a hedge for investors, like gold, against the falling value of currencies, he added.

“That is the reason for the pressure on the price of oil,” he said.

US crude hit a record of $117 a barrel on Friday.

Rising costs for materials, construction and oil service contracting has pushed up the cost of adding new oil output capacity in Saudi Arabia to between $5000 and $8000 per barrel, Al-Naimi said.

more...