The market took little comfort from Saudi Arabia's pledge for an incremental increase in oil production at the weekend as the price reversed its fall in recent days to rise to $136.45 per barrel, just a few dollars off its record high.
Gordon Brown added his voice to a chorus of global leaders calling for production hikes in an effort to stave off debilitating, oil-inspired inflation at a global energy summit in Jeddah at the weekend. The resulting pledge by Saudi Arabia to hike production by 200,000 barrels per day – equivalent to just over 2 per cent of its current 9.7 million barrels of daily output – did not have the desired result.
The oil price crept up by $1.04 yesterday in the first day of trading after the kingdom's decision, amid persistent worries that the growth of India and China will continue to more than offset the falling consumption in Europe and America.
Exacerbating the situation is Nigeria, where armed rebels opened a new front in their campaign against foreign oil companies last week by attacking a Royal Dutch Shell platform 120 miles of the coast. Deepwater platforms have generally been viewed as safe from attack, given their distance from the coast.
The consequent shutdown of the Bonga field, as well as production cuts at Chevron after a pipeline attack, has deprived the market of 300,000 barrels of daily capacity – more than the 200,000-barrel Saudi hike.
The stubbornly high oil price has led to an increasingly febrile environment around the world, with fisherman and lorry drivers striking in Europe and the UK, Chinese drivers panic-buying after the government introduced a shock 18 per cent increase to petrol prices, and the US Congress calling for a crackdown on financial investors who some estimates say are responsible for between $25 to $30 per barrel of the historically high price.
The chief executives of the UK's "Big Six" energy suppliers will appear today before the Commons Business, Enterprise and Regulatory Reform Select Committee to give evidence in an ongoing investigation into energy prices and the effectiveness of competition. Energy companies have begun in recent weeks to lay the ground tactfully for massive increases of between 30 and 40 per cent to household gas and electricity bills. Major spikes in wholesale prices for both gas and electricity, which are linked to oil – gas is, in most cases, indexed to oil, while electricity relies heavily on gas, which it burns at power stations – mean that the companies will have to pass on major chunks of the spikes or fall into loss.
Marius Kloppers, head of BHP Billiton, one of the world's largest resource groups, said in a speech yesterday in London that the notion that the oil price could be blamed on speculators was misguided. "For every long [investor] there is a short. We believe that the price is being set by the dynamics of supply and demand."