Despite the recent surge in oil prices — thanks to the events in the region — major players on the oil scene agreed on a moot point: Market fundamentals remain balanced and cannot be blamed for the current woes. No mean an achievement, indeed!

This was in sharp contrast to the tense, edgy and stressed atmosphere at the Jeddah Energy Summit hosted by Custodian of the Two Holy Mosques King Abdullah in June 2008. I was a witness to that too. Despite the efforts then, by some to bring the two parties — the producers and the consumers — closer, it was apparent they remained hostage to their respective camps. The divide was too apparent to be missed and definitely not to be easily bridged. The gap then was too big.

One could recall the US energy secretary at the time Samuel Bodman almost stamping his foot down, attempting to steamroll the producers, insisting that fundamentals and only fundamentals were responsible for the woes of the market and emitting the message — rather in loud and clear terms — producers needed to open the taps.

Bodman remained adamant throughout the proceedings, stressing nothing was there to back the accusations that “speculators” had pushed oil prices to their record levels. “There is no evidence that we can find that speculators are driving futures prices,” Bodman told a press briefing then in Jeddah.

The brief that Secretary Bodman carried that Sunday was apparent: “Fundamentally tight market conditions in our view are the major driver of the dramatic price increases that we have seen over the last five years, and particularly in recent months.”

On the other hand, producers also stood their ground, accusing non-fundamentals, the speculative money, and not any distortion in the global demand-supply balance, for the surging markets.

So stark was the gap between the two positions that it prompted this correspondent to ask Minister of Petroleum and Mineral Resources Ali Al-Naimi, at the press conference held at the end of the day with lengthening shadows, that on one side Secretary Bodman continues blaming fundamentals, and on the other he kept insisting that speculation and not fundamentals were to be blamed for the galloping prices. The simple question hence was who is to be believed?

But that was then. In less than three years, the situation has undergone a major transformation indeed.

Last Tuesday as the world's largest congregations of energy ministers sat down in Riyadh, to sign the new IEF charter, despite the surging oil market prices a sense of camaraderie was definitely in the air. Positions taken appeared accommodating and not necessarily conflicting.

Minister Al-Naimi too was categorical.

“This is not 2008. There is no physical shortage in the market. Crude supply and demand are balanced and the global inventory levels are at comfortable levels. With Saudi Arabia alone managing a spare capacity of more than 4 million bpd, the global spare capacity is somewhere between 5 and 6 million bpd. And in case required, producers will be ready to meet any call on additional output,” Al-Naimi laid out his cards in very clear terms.

And when it was the turn of Executive Director of the IEA Nobuo Tanaka, he too was not far from what minister Naimi and the assistant petroleum minister Prince Abdulaziz bin Salman have been stressing. Tanaka said, “OPEC Secretary General Abdulla El-Badri has assured me that in case of any supply disruptions, OPEC will step in to fill in the gap.”

He then went on to explain that a number of factors were responsible for the current price rise. There is a definite demand surge, yet speculation remains a major culprit. And although volatility cannot be completely taken out, yet we are very much in control,' underlined none other than the IEA top man. There was no blame game here.

The British Minister of State for Energy and Climate Change Charles Hendry also stressed that the world today is radically different from 2008. On the sidelines of the ministerial, while talking to press he too was convinced that the global inventory levels were at comfortable levels, ready to react if and when required. And he too conceded that despite the upheaval in Libya and possible associated supply disruption, the market was to a great extent balanced.

Daniel B. Poneman, the US Deputy Secretary of Energy, while talking to the press on the sidelines, too gave the impression, that supplies were adequate. “As far as we are concerned the spare capacity is there and we have not seen any evidence of physical shortage,” he conceded. “We believe there is a lot of product in the market.”

He also made it clear that despite all the emphasis on the alternatives and the emergence of new technology, the world would still be dependent on fossil fuel for at least three more decades. The interdependence is there to stay for a longer run, than some predict today.

The global energy equation has undergone a massive transition, a complete metamorphosis, over the last few years. The similarity of views expressed here by most was in sharp contrast to past — courtesy indeed the two decades of dialogue between the otherwise 'competing' parties. Indeed the entire process of dialogue and cooperation — instead of confrontation — received a major impetus when Riyadh embraced the idea at the highest level.

The International Energy Forum (IEF), its current Secretary General Noe van Hulst and the founding Secretary General Ambassador Arne Walther and their respective teams too deserve a special mention for their role in engineering a real change in the overall atmosphere. Thank you gentlemen for the fine work done.