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Getting a grip on oil prices - 24/06/2008

Oil tanker in a port

Oil-producing and importing countries must work together to bring down oil prices.

Oil prices can be lowered only by addressing supply and demand forces in the market, according to energy commissioner Andris Piebalgs, addressing an energy summit in Jeddah, Saudi Arabia, on 22 June.

“Oil prices over $100 are damaging for both consuming and producing countries. We have a common interest to work as a partnership to reduce volatility in the markets and bring oil prices back to sensible levels. We need to act together to return confidence and stability to the world economy and prevent recession,” he said .

He urged oil-producing countries to increase production and invest more in new production capacity, and called on consumer countries to improve energy efficiency, keep emergency stocks at high levels and combat market speculation..

Encouraging more dialogue with oil-producing countries, the EU is inviting the Organisation of Petroleum Exporting Countries (OPEC) to a high-level ‘ energy dialogue’ in Brussels on 24 June. The EU imports around 40% of its oil from OPEC countries, who are meeting for the fifth time with the EU since the talks began November 2005.

Saudi Arabia, the world's biggest oil exporter, has pledged to increase production by 200 000 barrels in July for the third month in a row and to make further increases as required to curb record prices.

The surge is causing hardship and tension in both the industrialised and the developing world. Europe has seen waves of protests and strikes against soaring fuel costs in recent weeks, led by fishermen, farmers and lorry drivers.

Amid concern that speculation, not just market forces, is driving up energy costs, the commission plans to monitor price developments and strive for greater transparency of oil markets. OPEC will present a report on how financial markets are affecting oil prices at the talks in Brussels.

The commission’s highest priority, at home and abroad, remains energy efficiency. The EU has put forward an integrated energy and climate change policy proposal to set Europe on the right track – towards a sustainable future.

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