The New Nation - Internet Edition

An analyst

Saudi King Abdullah bin Abdul Aziz has made it amply clear that it is not shortfall in production in OPEC countries, as the US and other western countries allege, but in-country tax, higher consumption and speculation by traders that escalated the price of petroleum oil. The Saudi King has termed the act of the speculators as abhorrent. The activities of the speculators is also dangerous for the developing countries of the world.

Saudi Arabia has shown the highest concern over oil price and its serious impacts on the developing countries. Saudi Arabia and OPEC (organisation of petroleum exporting countries) partners convened a one-day summit on 23rd June in Jeddah to explain to the major petroleum consuming countries and the world at large the actual situation and her intention to increase daily oil production to ease the situation and to create a fund of 1.5 billion dollars to help the developing countries who have been hit hard by oil price hike.

The Saudis have done so without anyone asking for it. This is a truly great and unprecedented gesture. The world, especially the northern hemisphere, has a good lesson to take from it.

Experts say oil is the lifeblood of the modern economy. God Almighty has blessed the Arabs with this lifeblood most. Four countries of the region Saudi Arabia, Iran, Iraq and Kuwait hold 58 per cent of the world petroleum oil reserve. Saudi Arabia is the top among the oil fortunates.

The recent OPEC summit and the Saudi gesture of 1.5 billion dollar fund is a clear testimony of concern for other countries. It is not the Arab countries which raised the price of petroleum oil so high, but the speculators and the overall trend of the global economy combined to give the push.

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At the beginning of the 20th century, price of per barrel petroleum oil was only 3 US dollars. At that time extraction of oil was meagre, demand was low and so was the price. For several decades price was stable and hike was steady and commensurate with other items. US support to Israel in the 1973 war on Arabs made the latter to impose embargo on US and the crisis led to price hike of oil. During the Iran-Iraq war in late 1970s, however, oil prices remained by and large stable. In 2003 the US-led invasion of Iraq, and finally occupation of the country, had impacts on the price of oil as several trillion barrels of petroleum was burnt as a result of bombing on Iraqi oil fields.

Speculation by seven big oil companies of which five are from the US and two from Europe contribute to price hike. They dictate the oil markets in America and other oil importing countries.

It is not OPEC, rather the speculators who dictate oil price. The Saudi King has hinted at them without naming anyone.