GUARDING BLACK GOLD: An Iraqi security man stands guard near a pipeline at a refinery in the waters of the northern Gulf close to the port town of Umm Qasr on Thursday. (EPA)

JEDDAH: Saudi officials said yesterday that the Kingdom has no “magic wand” that will resolve the skyrocketing oil prices.

Addressing a press conference ahead of tomorrow’s International Energy Conference here, Deputy Minister of Petroleum and Mineral Resources Prince Abdulaziz bin Salman said: “There are political, economic and regulatory factors involved.

“The soaring oil prices require immediate intervention by everyone. Combined solutions are needed where roles are defined.”

Echoing a commonly held view that market speculation has at least as much of a role in current pricing as supply, the prince said that no single factor is in play and that it is in Saudi Arabia’s interests to see a stabilization of the market.

He attributed much of the cause of this current crisis to “subjective circumstances” and warned that people should not be “overly optimistic” that anything but “temporary solutions” could be reached.

Ibrahim Al-Muhana, a ministry consultant, said tomorrow’s meeting of principal producing and consuming nations is important to identifying the causes and the solutions to the current troubles. “The emergence of new players has made it difficult for us to put our fingers at a clear reason (for the current problems),” he said, attributing the shift of speculation from the US subprime crisis to commodities trading as one reason for the rise in the prices of a range of commodities, not just oil.

Al-Muhana said it was obvious right now that all market forces are in harmony so it must be something outside the supply-demand formula that is causing the hike in prices. Financial factors contributing to the hike included a weak dollar and high demand on the euro in addition to the American subprime crisis.

“The fluctuation in the oil market is what made the king call the meeting,” he said.

Prince Abdulaziz said that there is cooperation among Saudi Arabia, OPEC, the International Energy Forum and the International Energy Agency to present a working paper to the meeting.

However, Saudi officials did not reveal any details about what they intended to propose at the meeting.

To combat the rise in prices, Saudi Arabia announced recently it would increase its production capacity by three million barrels per day to 12.5 million bpd by 2009. Saudi Aramco recently announced plans to build new refineries with French Total and US Conoco in order to meet the shortage of oil derivatives. Al-Muhana acknowledged that there is a link between the shortages of refiners and rising oil prices but said that this link is not a major factor.

OPEC President Chakib Khelil, who will attend the Jeddah oil summit, said yesterday it was illogical and irrational to ask the organization to increase output so as to take the pressure off soaring prices.

“Saudi Arabia decided to hold this meeting... in order to determine the causes behind rising oil prices,” he said. “The principal objective of the Jeddah meeting is to clarify positions regarding the reasons behind this rise,” the Algerie Presse Service quoted Khelil as saying. The Jeddah meeting comes days after oil prices jumped to new record highs just short of $140 per barrel, sparking fresh concerns that soaring energy costs will both stoke inflation and depress the global economy.

Khelil said that “just because car and computer prices were high, would one ask their producers to make more?” In London yesterday, Brent North Sea crude for August rose $2.86 to settle at $134.86 per barrel.