June 24, 2008
Effect of Saudi Summit on Oil Markets Unclear
WASHINGTON - When representatives of top oil-producing and oil- consuming nations sit down together Sunday for a hastily called summit in Saudi Arabia, they begin with a disconnect. The United States will argue for more global oil production to lower record prices, and producing nations will say the market is sufficiently supplied and that speculators are to blame.
What happens to oil prices afterward is anyone's guess.
Saudi Arabia is the only significant swing producer, the only one that can get new product onto global markets quickly. It's already added 300,000 barrels per day of new production this year, and it vowed this week to add an additional 200,000 barrels per day starting in July. Only Canada exported more oil to the United States last year than the Saudis did.
Backroom whispers suggest the Saudis might add an additional half a million barrels, which would raise production to well above the 9.02 million barrels per day of production reported in April. Saudi production nearing 10 million barrels per day could reverse the perception that supplies are so tight that they prompt fears of disruption.
How much any of this would help Americans at the gasoline pump isn't clear, because the Saudis haven't said whether this oil is heavy sour crude, which is harder to refine and not as sought after as the light, sweet crude most U.S. refiners prefer.
The Saudis have suggested that part of the run-up in prices is insufficient refining capacity in the U.S.
Originally published by McClatchy Newspapers.
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