The Times reports the following:
"Oil prices headed back towards record levels today after surging by more than $1 in early trading after a pledge from Saudi Arabia, the world's biggest oil exporter, to raise production failed to calm concerns following fresh attacks on a pipeline on Nigeria.
US light crude for August delivery today rose $1.76 to $137.12 a barrel, below the $139.89 record reached on June 13, despite Saudi Arabia stating it will raise daily crude output by 200,000 barrels to 9.7 million barrels next month, and committed to pumping more if needed.
Saudi Arabia was speaking at an emergency meeting of oil producing and consuming countries in Jeddah over the weekend.
Market analysts suggested the rise in production was insufficient, saying production had to rise to at least 500,000 barrels. Saudi Arabian Oil Minister Ali Al-Naimi admitted yesterday that the move was unlikely to tame prices.
'I am convinced that the supply and demand balances and crude oil production levels are not the primary drivers of the current market situation and that markets are already well-supplied.' ..."
Exactly, as I have already stated on this site, oil prices no longer reflect traditional supply and demand scenarios.
Gordon Brown's emergency dash to the Middle East this weekend, to plead for an increase in production, was a waste of time and shows that he does not "get" the oil market.
This will resolve itself in due course, once the speculators (who are driving the prices higher) get burned. That being said, until that happens, it will be very painful for all of us.