JEDDAH: The existence of spare capacity throughout the oil supply chain is important for the stability of the global oil market. Hence an appropriate increase in investment, both upstream and downstream, is necessary to ensure that the markets are supplied in a timely and adequate manner, a joint statement issued by Saudi Arabia and the secretariats of the international Energy Agency, the International Energy Forum and the Organization of Petroleum Exporting Countries said at the end of the Jeddah Energy Meeting yesterday.
It called for predictable energy and investment policies, as well as better access to technology as a necessity.
The meeting was held at the Jeddah Hilton and was convened at the request of Custodian of the Two Holy Mosques King Abdullah. It was attended by ministers and representatives from many producing and consuming countries, with the attendance of oil industry representatives as observers to discuss the current oil market situation. Participants noted with concern that oil prices have risen sharply and become more volatile, due to a host of factors, according to the joint statement. They sought to identify the causes and consequences of recent price behavior and suggested areas of improvement for the efficient operation of the oil market. They also noted that current oil prices and their volatility are detrimental to the global economy and, in particular, the economies of least-developed countries. Taking into account their diverse national circumstances and priorities, as well as their shared interest in a stable global oil market and sustainable economic growth, participants agreed that the situation requires concerted efforts from all parties — producing and consuming countries, the oil industry and all concerned parties — to bring stability to the international oil market for the benefit of all.
The statement emphasized that the transparency and regulation of financial markets be improved through measures to capture more data on index fund activity and examine cross-exchange interactions in the crude market.
“The quality, completeness and timeliness of oil data submitted through the monthly Joint Oil Data Initiative (JODI) should be enhanced. In order to further improve market transparency and stability, the seven organizations involved in JODI (APEC, Eurostat, IEA, IEF, OLADE, OPEC and UNSD) are called upon to start work to cover annual data that includes, among other things, upstream and downstream capacities and expansion plans,” the statement added. There should be immediate collaboration between the IEA and OPEC secretariats, together with the IEF secretariat, on preparing shared analyses of oil market trends and outlook, as well as of the impact of financial markets on the level and volatility of oil prices, which can be used to better understand the market situation, the statement added. It called for enhancing cooperation among international, national and service companies from all producing and consuming countries in investment, technology and human resource development and wanted energy efficiency to be promoted in all sectors through passing on market price signals, technology transfer and the sharing of best practices in energy production and consumption.
The parties to this statement have decided to convene a working group to follow up the needed actions on the recommendations. They also welcomed the invitation from the UK government to hold a meeting on the progress made on them in London before the end of the year.
