Saudi Arabia to Call Summit of Oil Producers

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

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

However, the statement by information and culture minister Iyad Madani following a cabinet meeting in Jeddah today stopped short of promising the increase in production requested by western leaders, including Gordon Brown. Saudi produces about 9.4m barrels a day and has the ability to increase by about 2m barrels a day. Current world demand is around 85m a day.

Although the price of a barrel of crude slipped slightly on Monday to $137, governments all over the world have watched in alarm as the cost has soared prompting protests from Europe to Indonesia.

Many experts predict that it will rise to $150 a barrel soon driven by Middle East tension and speculation, bringing more pain to consumers already hit hard by a sharp rise in domestic fuel costs and motoring expenses.

BP blames taxes

BP on Monday waded into the dispute claiming that soaring values and instability were being caused by a lack of supply. It blamed high taxes in producing countries while making no reference to the company having spent $50bn (?25.33bn) buying back its own shares over recent years — money which could have been invested in new 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 on new production, upgrading refineries and investing in alternative forms of energy, an increase of nearly 15% on 2007 but there was no comment on the $7.5bn spent in 2007 on share buybacks nor the $15.5bn spent in 2006 and $11bn the year before that.

A spokesman for the company later defended these payments totaling $50bn saying the right opportunities had not come along at the right price to invest in even more production.

Hayward also called for closer relationships between national state oil companies and global oil majors like his own at a time when there is speculation that his TNK-BP Russian joint venture might be forced to sell a stake to Kremlin-controlled Gazprom.

The Russian gas group, the largest of its kind in the world, will tomorrow be questioned about this relationship as its chairman, Alexei Miller, uses a public briefing in Deauville, France, to argue that it should be welcomed in Western Europe as a vital commercial partner, not as a dangerous political predator.

The comments come as the Russian private shareholders in TNK-BP have accused BP of trying to block the firm's expansion overseas by failing to approve projects at board level. Top managers deny they are not opposed in principle to such projects, which must pass a rate of return test like any other investment.

The joint venture has faced months of pressure including the arrest of an employee on spying charges and searches of its offices by state security agents. The Russian co-owners have also demanded the resignation of Bob Dudley, a former BP executive who is now chief executive of TNK-BP.