EU calls for lower oil prices at Saudi meeting


EU Energy Commissioner Andris Piebalgs called for a partnership between producing and consuming countries to bring the price of oil per barrel to a “two-digit” figure, speaking at a summit in Jeddah, Saudi Arabia, on Sunday (22 June).

Piebalgs said the partnership could take the form of “a joint commitment to take the necessary steps with the aim of bringing oil prices to a more reasonable level, in the order for example of a two-digit figure per barrel, and to stabilise it at such levels for a reasonable period”.

The emergency meeting was called by Saudi Arabia, which pledged to pump more oil to demonstrate the willingness of producing countries to deal with the oil price crisis. However, the summit’s joint communiqué failed to come up with more solutions, with other producing countries refraining from making similar commitments.

“We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply,” said Chakib Khelil, the president of the the Organisation of Petroleum Exporting Countries (OPEC), according to the Tehran Times.

Ali al-Naimi, the Saudi oil minister, said the focus on supply expansion was anyhow “unlikely to tame the current price behaviour,” according to Reuters. “What we’ve got here […] is agreement that the oil price is too high,” commented British Prime Minister Gordon Brown, the highest ranking European leader to attend the meeting. 

Saudi Arabia’s King Abdullah blamed the situation on “speculators acting in their own selfish interests,” echoing comments made by French Foreign Minister Bernard Kouchner at an EU summit last week, at which European leaders discussed possible solutions to oil price rises that have triggered protests across the continent.

However, amid the plethora of proposals, they were unable to overcome their divisions and asked the European Commission to draw up a report on available options for their next summit in October (EURACTIV 20/06/08).

At the Jeddah meeting, Piebalgs said producing countries should demonstrate their readiness to meet demand through measures to improve “investment and transparency”. “Oil-producing countries should increase both production and investment in new production capacity,” he said.

On the consumer side, he said countries should “make greater efforts to limit the growth in oil demand, by using precious oil more wisely [and] by being far more energy efficient.”

Last week’s EU summit conclusions point to a “possible revision” of an EU energy efficiency action plan, agreed in 2006 at a time when oil prices were still below $100 a barrel.

The European Commission recently announced its intention to bring forward proposals to revise the directives on energy taxation and charging of heavy-duty vehicles (‘Eurovignette’) (EURACTIV 12/06/08).

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