Oil price surge, revolution loom over Riyadh talks

Surging oil prices and popular revolutions that have already toppled two presidents overwhelmed the official agenda at producer-consumer energy talks, hosted by leading oil exporter Saudi Arabia on Tuesday.

Saudi Arabia and other ministers speaking on the sidelines of the International Energy Forum (IEF) in Riyadh have said so far there is no need to add more crude to well-supplied oil markets.

Representatives of consumer nations, however, say prices of well above $100 a barrel are beginning to threaten economic growth.

Saudi oil Minister Ali al-Naimi has yet to answer reporters' questions and has confined his comments to a welcoming address.

His deputy on Monday said the market had plenty of oil.

Fellow Gulf oil minister UAE Oil Minister Mohammed bin Dhaen al-Hamli said on Tuesday the Organisation of the Petroleum Exporting Countries would react if necessary, but supplies were getting through for now.

"What's happening in the Middle East hasn't stopped us from delivering crude on time to the markets," he said.

"We will react if the market needs more oil, but at the moment it's well-supplied. We're watching Libya. I think the prices are reacting to the current situation."

Oil markets this week climbed above $108 to their highest in 2-1/2 years after the kind of popular revolt that ousted leaders in Tunisia and Egypt erupted in Opec member Libya, where Muammar Gaddafi was on Tuesday hanging on to power.

Speaking in Jakarta, the IEA's chief economist Fatih Birol said oil prices were "a serious risk for the global economy" and that the International Energy Agency, which represents consumer nations, was ready to release oil from stocks if necessary.

The IEA's Executive Director Nobuo Tanaka was scheduled to address the formal agenda of the International Energy Forum on Tuesday.

Until protest against the four-decade rule of Libyan leader Muammar Gaddafi burst into the Libyan capital this week, many in the oil world has assumed the country's oil wealth would be enough to contain unrest.

The Libyan upheaval is also particularly significant to oil markets because it has disrupted supply and although the amount affected so far can be replaced, concern has grown about how far the contagion could spread.

The almost unthinkable scenario would be disruptions from Saudi Arabia, which supplies around 10 percent of the world's oil and also holds most of the world's spare capacity.

It is the only producer able to respond quickly with large volumes of oil to compensate for a serious supply outage.

Oil prices are still well below the all-time high of more than $147 a barrel touched in July 2008.

That rally prompted Saudi Arabia to call emergency talks in its Red Sea port of Jeddah and pledge to supply more oil if the market needed it.

In the immediate aftermath, the market rallied further before world financial crisis sent it crashing down to little more than $30.

Opec in response agreed its biggest ever output cut in December 2008 and has not formally changed policy since, although it has progressively increased production above agreed targets.

The group is not scheduled to meet formally to reassess output policy until June.

The market is much better supplied and has higher levels of inventory than it was in 2008 when emerging China, the world's second largest oil consumer after the United States, led a surge in demand.

But the levels of geopolitical risk are more alarming.

"I think regional stability is blowing all concerns about price off the table for now," said analyst Bill Farren-Price of Petroleum Policy Intelligence.

"They don't want a repeat of 2008 but frankly that is in second place to maintaining stability, which is top priority right now."