JIDDAH, Saudi Arabia – Facing strong U.S. pressure and global dismay over oil prices, Saudi Arabia said Sunday it will produce more crude this year if the market needs it. But the vague pledge fell far short of U.S. hopes for a specific increase and may do little to lower prices immediately.
For now, the current "oil shock" leaves Western countries with little choice but to move toward nuclear power and change their energy-consumption habits, Britain's prime minister warned at a rare meeting of oil-producing and consuming nations.
Saudi Arabia — the world's top crude exporter — called the gathering Sunday to send a message that it, too, is concerned by high oil prices inflicting economic pain worldwide.
Instead, the meeting highlighted the sharp disagreement between producers like Saudi Arabia and consuming countries like Britain and the United States over the core factors driving steep price hikes. Oil closed near $135 a barrel on Friday — almost double the price a year ago.
The cost of gasoline also has become a sore point in the U.S. presidential race, with President Bush and presumed Republican nominee John McCain calling on Congress to lift its long-standing ban on offshore oil and gas drilling. Barack Obama, the presumptive Democratic nominee, has said such moves will do nothing to ease American consumers' pain short-term.
The U.S. and other nations argue that oil production has not kept up with increasing demand, especially from China, India and the Middle East. But Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation and the falling U.S. dollar.
Saudi Oil Minister Ali al-Naimi said the kingdom is willing to produce more than the 9.7 million barrels of oil a day it had already planned to produce in July — if the market requires it.
But the Saudi oil minister also blamed speculators and asserted supply is not the problem.
"In today's environment, I am convinced that supply and demand balances and crude oil production levels are not the primary drivers of the current market situation," al-Naimi said. Officials and energy executives from more than 35 countries thronged a large hall where he spoke.
King Abdullah also said Saudi Arabia is not the culprit.
The king cited several factors driving "the unjustified, swift rise in oil prices" including "speculators who play the market out of selfish interests," plus higher consumption by developing countries and higher taxes in some countries.
U.S. Energy Secretary Samuel Bodman, however, said earlier that U.S. officials had found no evidence speculators are driving up prices.
Saudi officials have consistently said the country would provide enough oil to supply the market. The kingdom announced a 300,000 barrel per day production increase in May and said before the start of the Jiddah meeting that it would add another 200,000 barrels per day in July, raising total daily output to 9.7 million barrels.
Both announcements had already been factored into oil prices before Sunday's meeting — and neither did much to stem their rise. Total worldwide crude production is about 85 million barrels per day.
The Saudi output increase is "going to help a little bit, maybe reduce prices just a little," New Mexico Gov. Bill Richardson, a Democrat and former President Bill Clinton's energy secretary, said on CNN's "Late Edition" program. "It won't be significant."
It remained unclear if Sunday's announcements would have any greater effect.
At least one analyst said he thought they would only spur prices higher.
The oil market has been in a holding pattern to see if Saudi Arabia would take more aggressive steps toward boosting output, said Stephen Schork, an oil market analyst and trader in Villanova, Pa. The market's likely to view the announcement as a sign it will not, he said.
"We don't know anything more today that we didn't know Friday," said Schork, who predicted "$150 (a barrel) here we come."
Linda Rafield, senior oil analyst at energy trade publication Platts, said she expected the reaction to be less dramatic.
"I don't see prices going into freefall at the start of trading this evening, but I don't see the bulls being given any reason to bid prices back up to the $140 level," she said.
Bush has visited Saudi Arabia twice this year to push the country's king to increase oil production but has little to show for the effort.
To address long-term concerns about supply, al-Naimi said Saudi Arabia also is willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009 — again, if the market requires it.
That reversed previous indications the country would not go beyond that figure.
British Prime Minister Gordon Brown echoed U.S. officials' calls for commitments of specific production increases. Such actions would help ensure that "instead of uncertainty and unpredictability, there is greater certainty, and instead of instability, there is greater stability," he said.
But he and Bodman also urged consuming countries to increase energy efficiency and invest in alternative sources of fuel. Brown said the high prices — what he termed an "oil shock" — leave industrialized countries with few choices but turning more to nuclear power and lowering energy consumption.
A joint statement issued by participants also urged countries to improve energy efficiency. The vaguely worded statement also promoted investment in spare capacity and called for improved transparency and regulation of financial markets, but provided few specifics — again highlighting the confusion and disagreements over the core causes of oil's price surge.
Abdullah called for the creation of a $1 billion energy initiative to help poor countries combat fuel prices and said Saudi Arabia would contribute $500 million to provide loans to finance development and energy projects.