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Oil Prices Rise Despite Saudi Meeting

June 23, 2008

NEW YORK --- A Saudi Arabia-hosted emergency energy summit meeting over the weekend, aimed at addressing consumer nations' concerns over skyrocketing oil prices, has failed to provide near-term relief.

Saudi Arabia announced a modest production increase of 200,000 barrels a day and an expansion of output capacity if needed in the future, the Associated Press reported. But Monday, June 23, light, sweet crude for August delivery rose $2.29 to $137.65 a barrel on the New York Mercantile Exchange.

Saudi Arabia is the only oil-exporting nation with the ability to significantly boost production quickly. Many market experts had hoped for a bigger increase, AP reported. The United States and other nations argue that oil production has not kept pace with increasing demand, especially from China, India and the Middle East.

But Saudi Arabia and other OPEC countries blame the higher prices on financial speculation and the declining U.S. dollar.

"Obviously, the Saudis are concerned, and that could be a bearish factor," said Andrew Lebow, senior vice president at MF Global LLC in New York. But any longer-term production increases are years away, Rafield told AP.

Concerns about Nigerian production also boosted prices Monday. Royal Dutch Shell PLC said it cannot meet contractual obligations to export oil from a Nigerian oil field following a militant attack Thursday, June 19. Also, Chevron Corp. has reportedly been forced to shut down a Nigerian oil facility following a militant attack.

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