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Oil consuming nations stepped up pressure on the Organization of Petroleum Exporting Countries (OPEC) on Sunday to increase production at an international summit on spiraling crude prices in the Saudi city of Jeddah. OPEC leaders are saying doubling of oil prices over the past year was due to geopolitical tension, unregulated speculation and a shortage of refining capacity rather than a failure by producers to supply enough crude.
Antonia Juhasz, author of the book “Tyranny of Oil” comments on the current situation.

Story Transcript

ZAA NKWETA (VOICEOVER): At a summit in Saudi Arabia on Sunday between oil-producing and -consuming nations, Saudi King Abdullah said his country was not to blame for soaring oil prices.

KING ABDULLAH OF SAUDI ARABIA (SUBTITLED TRANSLATION): Dear brothers and sisters, there are several factors behind the unjustified, swift rise in oil prices and they are: speculators who play the market out of selfish interests, increased consumption by several developing economies, and additional taxes on oil in several consuming countries. Despite these facts and even though OPEC – (Organization of Petroleum Exporting Countries) has sought to meet demand we find those, who point the finger of blame at OPEC alone.

MUNIER (VOICEOVER): OPEC leaders also blamed the near-doubling of oil prices over the past year to geopolitical tension and a shortage of refining capacity, rather than failure by producers to supply enough crude. Saudi Arabia increased oil production by 300,000 barrels a day in May, and a Saudi official confirmed Saturday that the country would add another 200,000 barrels a day in July, increasing the output to 9.7 million barrels a day. But neither announcement has done much to stem the run-up in the price of oil, which closed to near US$135 a barrel on Friday. The Real News Network spoke to Antonia Juhasz, author of the upcoming book Tyranny of Oil, and asked her to explain the current situation.

ANTONIA JUHASZ, AUTHOR AND OIL POLICY ANALYST: I would say that the biggest culprit right now is speculation, and not just the fact of speculation, but speculation taking place on unregulated exchanges, speculation taking place essentially in a market free-for-all, so that we definitely are seeing not only rampant speculation, but we’re also seeing criminal speculation, that we’re seeing a manipulation of the market, and we’re seeing the price being driven further and further and further up for just one very simple reason: lots and lots of people are making money off this. When you have supply exceeding demand, yet price is still skyrocketing, there’s clearly something else going on. And the reason why there is excess supply is that the oil tomorrow is worth more than oil today. So we’ve got oil companies and countries and others sitting on their spare supply, waiting for it to garner more money. The US regulators themselves are identifying cases of intentional manipulation of price by, among others, companies like Marathon, BP, Shell, that the oil companies themselves are involved in manipulation.

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Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.