Oil price makes record leap
Energy ministers meet in Japan after the cost of crude hits $139 a barrel.
“These prices are unprecedented and against the interest of both consuming and producing countries. They pose a great burden, particularly on resource-scarce developing countries,” it said.
Before the meeting, Sam Bodman, the US energy secretary, had called for more countries to scrap fuel price subsidies saying that further regulation of the oil markets would not solve the problem.
“It’s a shock, but if you look at the rate of oil production globally, it has been 85 million barrels a day for three years in a row,” he said.
Friday’s jump in the oil price doubled the previous one-day record, set the previous day, and extended a run that has seen prices rise sevenfold since 2001 as investors and speculators see producers struggling to keep pace with demand.
The price of oil has risen 44 per cent this year.
John Sfakianakis, chief economist at the Saudi British Bank, said speculation and the softening of the US dollar was contributing to rising oil prices.
Subsidies cut
Ending fuel subsidies has caused other problems for governments as protests have gripped many countries as consumers have seen prices rise dramatically.
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Oil price puts squeeze on IndonesiaIndia’s government, which imports 70 per cent of its oil, cut fuel subsidies earlier in the week, causing an 11 per cent rise in the cost of petrol.
The International Energy Agency has warned that oil demand would rise by 70 per cent if governments continued with their current policies.
Opec has regularly rejected calls to increase production saying the market is well supplied.
But fears that supplies could be hit contributed to Friday’s rise with traders reacting to remarks from Israel’s transport minister which suggested that Iran, Opec’s second biggest producer, would be attacked if it did not abandon its nuclear programme.