Fuel Costs: Saudi Arabia to Call Opec Summit in Attempt to Stem 'unjustified' Oil Price Surge

Saudi Arabia says it will call a summit of oil producers and consumers in an effort to stem the surge in the price of oil, amid fears that the world economy could suffer if fuel costs continue to rise.

The world's biggest producer said recent rises, including the record $10 leap on Friday, were not justified by market fundamentals and it would work with Opec to guarantee supplies.

The statement from the information and culture minister Iyad Madani followed a cabinet meeting in Jeddah yesterday. It stopped short, however, of promising the increase in production requested by western leaders including Gordon Brown. Saudi Arabia produces 9.4m barrels a day and world demand is 85m barrels a day.

Gordon Brown was quick to welcome the Saudi stance. A Downing Street spokesman said: "The prime minister welcomes this announcement, which the energy minister, Malcolm Wicks, will discuss when he visits Saudi Arabia later this week. This initiative echoes the call from the British government for enhanced dialog and meetings between oil producer and consumer nations. As the Saudi minister has said, current oil prices are unjustified.

"We will do everything possible to ensure there is a coordinated international approach to deal with both the demand and supply issues in the oil market, which is why we have asked for this to be put at the top of the EU and G8 agendas."

Although the price of a barrel of crude dipped $4 yesterday to just over $134, governments all over the world have watched in alarm as the oil price has moved steadily upward, prompting protests from Europe to Indonesia.

BP claimed yesterday that soaring prices and instability were being caused by a lack of supply. It blamed high taxes in producer countries but made no reference to the $50bn the company had spent buying back its own shares over recent years - money which could have been invested in boosting output.

Tony Hayward, chief executive of BP, told an oil and gas conference in Kuala Lumpur: "The taxes governments take from the oil and gas industry have continued to increase across the world. I believe this is unsustainable and counterproductive. All it means is that you have less money to invest in new production."

Hayward said BP would invest $22bn this year in new production, upgrading refineries and investing in alternative forms of energy, an increase of nearly 15% on 2007. BP spent $7.5bn in 2007 on share buybacks, $15.5bn in 2006 and $11bn the year before that.

A spokesman for the company later defended these payments, saying the right opportunities had not come along at the right price to invest in more production.