June 23, 2008
Saudi Arabia has signaled its intention to pump more oil if that's what it takes to bring oil prices down from their record highs. But as OPEC members ended an emergency meeting over the weekend, other members of the oil cartel expressed skepticism that more oil on the market will influence prices.
OPEC President Chakib Khelil called the Saudi decision to produce more oil "illogical," saying the world is currently awash in oil and doesn't need more. Khelil made no secret that he views the current record prices for oil as a product of rampant speculation on the futures market.
That view is shared by some in Congress, where at least one lawmaker has introduced legislation to regulate hedge funds and non-users of oil out of the energy market.
The Saudis have committed themselves to pump nearly 10 million barrels a day during July. Libya's oil minister expressed frustration at that decision, saying there is already too much oil, and that Libya might reduce production next month to offset the Saudi increase.
Algeria, Iran, Venezuela and Qatar are also opposed to the Saudi's plans for higher production, saying oil refiners aren't requesting more oil.
Meanwhile, speculators continue to buy oil futures contracts. The price of oil rose to $139.89 a barrel on June 16. Investors are buying oil because its price keeps going up.
While the Bush Administration generally sees it as a matter of supply and demand, Khelil and some other OPEC ministers say investors are drawn to oil for the same reason they are buying gold as a hedge against a declining U.S. dollar.
