Oil price 'abnormally high' - Emirates24|7

Oil price 'abnormally high'

UN chief Ban Ki-moon.

Opec powerhouse Saudi Arabia views skyrocketing oil prices as "abnormally high" and is willing to do what it can to bring them down, visiting UN chief Ban Ki-moon said yesterday.

Briefing reporters on his meeting with Saudi King Abdullah on Saturday, Ban said they spent a great deal of time focusing on the link between the soaring crude prices and the worsening food crisis as well as climate change. "He acknowledged that the current oil prices are abormally high due to speculative factors and some other national government policies," the UN secretary-general said in the Red Sea city of Jeddah.

"He is willing to what he can to [bring] the price of oil to adequate levels."

Ban said the Saudis, whose desert kingdom is the largest oil producer in Opec, "seem to be considering very seriously how they can address this issue by increasing production. I expect that they will take some concrete measures."

Media reports have suggested Riyadh plans to raise output next month by about half a million barrels a day to 10 million barrels, a possible sign it is becoming nervous about the political and economic effect of high prices.

Saudi Arabia is also hosting a summit in Jeddah on June 22 for consumer and producers to discuss oil prices, which struck a record high of nearly $140 a barrel earlier this month, stoking fears of surging global inflation and weaker economic growth. Ban expressed hope the Jeddah meeting would yield a productive outcome.

While reaping record profits, the Saudis are concerned record prices might dampen economic growth and lead to lower oil demand, as is the case in the United States and other developed countries, according to The New York Times.

It said the high prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy of Saudi Arabia, which is currently pumping 9.45 million barrels a day.