Producers and consumers meet to discuss oil price and energy security as crude approaches the highs of the Libyan crisis.
Fine balance sought at oil summit in Gulf
Oil producers and consumers meet tomorrow in Kuwait to discuss growing threats to supply, rising prices and an uncertain outlook for the global economy.
Energy ministers and executives of oil companies from 88 nations, including the UAE, will gather as Brent, the European benchmark crude, trades at US$125.98 a barrel, about a dollar short of last April's peak during the uprising against Muammar Qaddafi in Libya.
Worries about western sanctions on Iran and supply outages in Sudan, Yemen and Libya have driven oil up 17.3 per cent since the beginning of the year. The Opec crude basket, a weighted average of the group's varieties, reached a three-year high last week, $16.60 short of its all-time high in 2008.
"The price of oil concerns everyone," said Aldo Flores, the secretary general of the International Energy Forum, the producer-consumer group based in Riyadh. "We need prices that are fair to producers and fair to consumers."
He declined to name such a price, but said there was enough spare capacity and the market was "well served".
Opec is pumping at a rate of 30.92 million barrels per day, its highest level in more than three years, as Iraq, Angola and post-revolution Libya increase output.
The threat of a military confrontation with Iran over its nuclear programme or a closure of the Strait of Hormuz, the narrow waterway through which 20 per cent of the world's oil passes, have led analysts to project a wide range of oil price estimates. Credit Suisse says oil will descend towards $100 because of the wavering world economy, while Erste Group predicts it will surpass its all-time high of $147 by July.
"We need prices that don't vary to such a degree that they make it very difficult for the companies that invest to plan ahead and really make those investments that are required," Mr Flores said in Dubai.
"So the concern really is about creating the conditions in markets for stability, for predictability so that long-term decisions can be made."
The forum brings together figures spanning the political and energy spectrum.
One panel features Ali Al Naimi, the long-time Saudi oil minister, Daniel Poneman, the US deputy energy secretary, and Rostam Qasemi, the Iranian oil minister who has been particularly vocal recently about the impact of western sanctions targeting Tehran's nuclear programme.
The ministers also meet against the backdrop of the one-year anniversary of the accident at Japan's Fukushima Dai-ichi nuclear power plant. Japan is the only nation planning to send more than one minister to Kuwait, a sign of the renewed importance of fossil fuel imports now that it has shut down all but two of its 54 reactors.
"In the minds of both policymakers and companies, it is now high on the set of priorities to promote the safety and security of installations of critical infrastructure and also the environmental sustainability of the provision of energy," said Mr Flores.
Following the Fukushima disaster several European nations halted or accelerated phase-outs of their atomic energy programmes. But more than 60 nuclear power plants remain under construction, in countries including the UAE, China and France.
"These numbers suffice to indicate that nuclear power will continue, even if some countries like Germany, Italy, and Switzerland, have decided to abandon nuclear power," said Pierre Gadonneix, the chairman of the World Energy Council, a think tank that is based in London.