Kuwait followed Saudi Arabia in saying crude oil prices are too high as evidence mounts that energy costs are restraining growth and accelerating inflation.
``I think it's high,'' Kuwait Finance Minister Mustafa Al- Shimali said in an interview in Isfahan, Iran, today. A reasonable oil price would be ``more or less $100,'' he said.
Crude oil for July delivery fell 50 cents to $134.11 a barrel on the New York Mercantile Exchange at 10:59 a.m., after touching a record $139.89 yesterday.
Saudi Arabia, the world's largest oil exporter, has said the surging price of the commodity is ``unjustified'' and will host a meeting of producers and consumers in the coastal city of Jeddah on June 22 to help stabilize prices. Saudi Arabia will increase oil output by 200,000 barrels a day next month, King Abdullah told United Nations Secretary-General Ban Ki-Moon on June 15, according to a UN spokesman.
Oil prices fell 2.7 percent last week as Saudi Oil Minister Ali al-Naimi began to organize the meeting between producers, major industrial consuming nations and banks. State-owned Saudi Aramco said June 13 that it would start pumping oil from its 500,000 barrel-a-day Khursaniyah field within a month, a project that's been delayed since December.
``I would like to see these prices go down and in parallel also have the price of goods we import go down,'' Kuwait's al- Shimali said.
Kuwait's Inflation
Kuwaiti inflation accelerated to a record 10.1 percent in February as the cost of housing soared. Inflation rates have risen above 10 percent in five of the six Gulf Cooperation states, including Saudi Arabia and the United Arab Emirates, this year.
Kuwait pumped 2.59 million barrels a day last month, according to Bloomberg estimates, trailing behind Saudi Arabia, Iran and the United Arab Emirates. Saudi Arabia said it will produce 9.7 million barrels of crude a day next month, according to the UN's Ki-Moon. That represents a 450,000 barrel-a-day increase from the amount it pumped during May, according to Bloomberg estimates.
The Organization of Petroleum Exporting Countries doesn't have an official price target for crude oil, though officials from the group's 13 member nations have repeatedly said prices are too high. The group kept official production quotas steady at its last three meetings in December, February and March.
Iran, OPEC's second-largest producer, objects to an increase by Saudi Arabia without prior consultation with other OPEC members.
Iran's Objections
``Any increase in oil production should be validated in this body's ministerial meeting,'' Iran's OPEC governor, Mohammad Ali Khatibi, said on the state television Web site. ``If Saudi Arabia undertakes to raise output unilaterally, it will be a wrong action.''
The Jeddah meeting will be attended by energy ministers from producing nations, including Kuwait's Mohammed Al-Olaim, as well as representatives from importing countries, such as U.S. Energy Secretary Samuel Bodman, German Economy Minister Michael Glos and French Energy and Environment Minister Jean-Louis Borloo.
``It is apparent that in this meeting, consumers will talk about the increase of oil production rather than other issues, while producers believe that there is no shortage in the oil market,'' Iran's Khatibi said.
OPEC President Chakib Khelil, speaking in a June 12 interview in Algiers, ruled out the possibility of an official production increase from OPEC before the group's next meeting in September, rejecting U.S. arguments that supply and demand, rather than speculation, is behind the surge in prices.
Oil futures prices averaged over 200 days surpassed $100 a barrel for the first time today on the New York Mercantile Exchange, an indication of the durability of a rally threatening global economic growth. The so-called 200-day moving average indicator crossed $70 on Nov. 7, $80 on Feb. 8 and $90 on April 23.
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