JEDDAH, Saudi Arabia - Saudi Arabia and other producers with oil to spare could agree to raise output at an emergency meeting of energy powers this weekend, but OPEC countries say speculation, not supply, is behind high prices.
Riyadh summoned both sides and chief executives from big oil firms to meet on Sunday after an unprecedented day of trading on June 6. U.S. oil rose by nearly $11 a barrel to a new peak in its largest ever one-day rise.
The price has more than doubled in a year to almost $140 a barrel, triggering protests from Brussels to Bangkok over record fuel costs that threaten the world's economy.
Saudi Arabia said in recent days it would raise output to 9.7 million barrels per day (bpd) in July and its influential Oil Minister Ali al-Naimi said on Friday an announcement would be made this weekend.
The kingdom, which is the world's biggest oil exporter, has a policy of keeping a cushion of spare capacity and has said other OPEC members that can bring on extra production quickly would also discuss boosting output to try to tame the oil rally.
"The short-term policies to be discussed include the proposal that those OPEC countries that have spare capacity should boost supply, just like Saudi Arabia has announced it will do in July," a senior Gulf OPEC official told Reuters.
Looking to the longer term, the source also said Saudi Arabia would consider increasing its capacity beyond an existing goal of 12.5 million bpd by the end of next year.
The two other OPEC members with some extra capacity are the United Arab Emirates and Kuwait. Another OPEC delegate said it was not yet clear whether they would join in any output rise.
While consumer nations have said an OPEC output rise would help to calm runaway oil markets, OPEC countries have repeatedly blamed factors including speculation, a weak dollar and political instability.
Libya's top oil official Shokri Ghanem said the market had more than enough crude.
"There's oversupply in the market. We believe the prices are high, but it's not because of supply and demand," he told Reuters.
He did not expect Sunday's meeting to come up with concrete measures.
"You can't get any decision on important matters in the energy market in a meeting of three hours," he said.
Apart from supply and demand, Sunday's meeting is also expected to air the debate of whether speculation is responsible for current price levels and what can be done about it.
"Governments have a role in organizing (oil) markets and structuring them in a way that prevents speculators behaving in a manner that has led oil prices to reach their current levels," Deputy Saudi Oil Minister Prince Abdulaziz bin Salman was quoted as saying by the Saudi-owned daily Asharq al-Awsat.
Investment funds have pumped billions of dollars into oil and other commodities as they seek to diversify holdings and flee poorly performing asset classes.
U.S. regulator the CFTC, under pressure from lawmakers, has announced a task force to explore commodity activity. It also made public this week a deal with its British counterpart to limit trading on oil futures on the London-regulated ICE exchange.
While Saudi Arabia wants action from consumer governments to rein in the speculators, western leaders, including President George W. Bush, have lobbied heavily for more Middle Eastern crude.
The United States, the world's biggest energy consumer, has a close relationship with Saudi Arabia going back decades.
Saudi Arabia's King Abdullah will open the meeting on Sunday, followed by an address by Britain's Prime Minister Gordon Brown, the highest-level foreign dignitary to attend. U.S. Energy Secretary Sam Bodman will represent Washington.