Saudi oil output to rise in July

Saudi Arabia will increase its oil production by 200,000 barrels a day next month in a move to meet growing world demand, the United Nations says.

The news was announced after UN Secretary General Ban Ki-Moon met Saudi Oil Minister Ali al-Naimi in Jeddah for talks on the high oil price.

Last month, the Kingdom increased its production by 300,000 barrels a day.

The country is thought to be the only oil producer with the ability to pump substantially more crude.

It argues that the current high prices are caused by speculators rather than any shortage of crude oil.

Oil prices fell by almost $2 on Friday after reports that Saudi Arabia might boost oil production. US light, sweet crude was trading at $134.86 in New York.

'Speculative factors'

After an earlier meeting with the Kingdom's King Abdullah, Mr Ban said Saudi Arabia, the world's biggest oil producer, viewed current prices as "abnormally high".

"He [King Abdullah] acknowledged that the current oil prices are abnormally high due to speculative factors and some other national government policies," Mr Ban said.

"He is willing to what he can to [bring] the price of oil to adequate levels."

On Friday, the Saudi oil minister said current elevated oil prices - which hit a record high of more than $139 (£71) a barrel last week - were unjustified.

Oil minister Ali al-Naimi said a meeting of oil exporters and importers to be held in Jeddah later this month would seek a solution to the unprecedented high prices, the Saudi state news agency said.

The Kingdom is hosting an international gathering of oil producers and consumers in a week's time.

China and Japan 'near gas deal'

Japan and China are close to a deal that would ease a long-running dispute over gas fields in the East China Sea, reports from Japan say.

The two sides were "working out final details", top government spokesman Nobutaka Machimura said.

His comments came after Japanese media said an agreement on joint exploration of disputed areas had been reached.

China will allow Japan to invest in drilling projects in return for a share of the profits, Kyodo News agency said.

The dispute has been an ongoing irritant in China and Japan's often tense relationship.

But ties have improved in recent months and in May Chinese President Hu Jintao visited Tokyo for talks with his Japanese counterpart, Yasuo Fukuda.

Under the deal, China and Japan would conduct joint exploration of several gas fields in offshore areas each side claims, Kyodo said, citing government sources.

The deal would allow undersea oil and gas resources to be accessed while putting to one side the wider issue of overlapping territorial claims, the agency said.

An official announcement could come as early as this week, the agency quoted the sources as saying.

Malaysia to boost rice production

A Malaysian palm oil company is to begin rice cultivation to tackle growing shortages of the staple crop and help satisfy record demand for it.

Sime Darby will grow the grain on 17,000 acres of land in the state of Sarawak on the island of Borneo.

The rice will be used for domestic consumption, to ease worries over food supplies in the country.

Malaysia imports more than a fifth of its rice needs and prices have soared as global demand outstrips production.

Slow production

In April, the government announced that it planned to make the country more self-sufficient by growing large amounts of rice in Sarawak.
Sime Darby, the world's largest palm oil producer, said it hoped to produce good quality, profitable rice for local consumption and help address food supply pressures in the country.

"Now it's time for us to go back to basics because food has turned out to be the most important item," its chairman, Musa Hitam said.

Company officials will visit Sarawak next week to arrange further details of the plan.

The global price of rice has risen by as much as 70% during the past year as production lags behind demand and land is increasingly used for industrial and urban development.

Recent environmental factors such as flooding in Indonesia and Bangladesh, the devastating cyclone in Burma and cold weather in Vietnam and China have also hurt production.

Several rice-producing countries such as India and China have put curbs on exports in order to safeguard stocks of the grain for domestic consumption.

Controversy

Companies involved in palm oil have courted increasing controversy in recent times due to environmental concerns about the production process.

Activists have singled out various governments for putting demand for palm oil above environmental concerns.

Indonesia has faced particular criticism, with some accusing it of clearing away huge swathes of rainforest and destroying the natural habitat of orang-utans to increase supply for the oil.

Palm oil is an ingredient in foods, soaps and detergents and a bio-fuel added to diesel for cars.

Asian, European ministers say price rises threaten stable growth

Asian and European finance ministers warned on Monday that surging prices for oil, food and other commodities threaten stable world economic growth.

Wrapping up a two-day meeting dominated by the issue, they said in a statement the increases "pose a serious challenge to stable economic growth worldwide and have serious implications for the most vulnerable."

The ministers or their deputies from 27 EU countries and 16 Asian nations called for coordinated policy responses to cushion the impact, including greater investment in agriculture and energy and the maintenance of open markets.

"Ministers highlighted the need for further analysis on the real and financial factors behind the recent surge in commodity prices, their volatility and the effects on the global economy," the statement said.

Delegates to the Asia-Europe Meeting (ASEM) of finance ministers, on the South Korean resort island of Jeju, said they remain positive about the long-term global economic outlook but short-term prospects had weakened.

Downside risks included the US slowdown, tightened credit in world financial markets and "mounting inflationary pressures mainly driven by high energy and food prices."

The ministers, whose countries represent 60 percent of the world's population and about half its output, stressed that both Asia and Europe are "significantly more resilient" to external shocks than a decade ago.

But they cannot be fully immune to global economic risks, they said.

The meeting has been marked by warnings of the potential dangers posed by rapidly rising commodity prices.

South Korean President Lee Myung-Bak said the world faces its most serious economic crisis since the 1970s.

"Instability in the global financial market has spread to the real economy, thus putting a damper on world economic growth," Lee said in a speech. "Coupled with a steep hike in the price of oil, food and raw materials, it is now no exaggeration to say that the global economy is faced with the most serious crisis since the oil shocks of the 1970s."

Lee's own government is grappling with a truckers' strike over high fuel prices, the latest in a series of sometimes violent protests worldwide.

Haruhiko Kuroda, president of the Asian Development Bank, called for safety nets for the poor, reforms to agriculture and measures to increase productivity.

"Food prices can become a very sensitive economic and political issue (in Asia)," he said.

French finance minister Christine Lagarde called on oil producers to expand output and pressed for more investment in exploration to drive the price down.

"In the short and longer terms there are global proposals that need to be endorsed -- number one, an increase of production, and number two, additional exploration and production of oil," Lagarde told reporters.

The French minister also urged a change in energy mix patterns and consumption and a "better understanding of how the market functions."

Lagarde last weekend attended a Group of Eight meeting of finance chiefs, at which some delegates expressed suspicion that speculators were driving up oil prices.

She said ministers, meeting in closed session earlier Monday, concluded that Asia and Europe had coped better than expected with the crisis.

"The economies in the two regions have been more resilient than expected, but both need to continue to work to fight rising prices as well as support economic growth."

Oil prices drop amid talk of Saudi output increase

Oil crude futures fell on Monday to stand slightly above 134 dollars after the UN chief said top Opec crude producer Saudi Arabia had agreed to increase output to help cool record high prices.

New York's main oil futures contract, light sweet crude for July delivery, dropped 77 cents to 134.09 dollars per barrel, as the European trading day began.

Brent North Sea crude for August delivery lost 86 cents to 134.25 dollars.

UN Secretary General Ban Ki-moon, after a weekend visit to Saudi Arabia, said Saudi Oil Minister Ali al-Nuaimi told his kingdom would raise production by 200,000 barrels a day in July on top of a hike of 300,000 barrels made in June.

"They will respond positively whenever there is a request from their customers, so there is no shortage," Ban said. He said that "they don't want to be blamed" for high oil prices.

The price of New York crude hit a historic high point of almost 140 dollars a barrel earlier in June as oil consumers fretted over a feared tight supply situation amid robust demand for energy. Oil prices broke through 100 dollars for the first time ever only at the start of 2008 and began 2007 trading at about 50 dollars. Global finance officials fear high oil prices pose a threat to world economic growth, while truckers and others in Europe and Asia are holding protests over the rising cost of fuel.

Inflation dangers 'threaten Asia'

The threat of high inflation remains a major worry for Asia, and could undo the progress made in the past 20 years, the Asian Development Bank (ADB) says.

ADB managing director Rajat M Nag said inflation in 2008 would exceed the 5.1% annual figure predicted in April.

Rising fuel and food prices were the chief dangers behind inflation that affected Asia "good growth story".

Rising inflation could also hit investment and corporate earnings, and destabilise governments in the region.

On Friday India said its inflation had risen at its fastest rate in seven years. And earlier in June South Korea said its inflation had hit a seven-year high as a result of rising energy and food costs.

In Vietnam inflation is more than 25% and the government has said the issue is the biggest challenge it faces.

Singapore, Thailand, and the Philippines and Indonesia are facing inflation rates of between 7.5% and 11%.

'Regressive' taxation

The ADB has forecast 7.6% growth for the region in 2008, down from 8.7% in 2007, which was the highest in two decades.

Mr Nag said Asian monetary and fiscal authorities should "recognise inflation as a very major concern" and indicated that raising interest rates could be one solution.

Inflation "can endanger growth in Asia," he said, adding that "central banks should take all steps, including looking at rates as what India has done quite appropriately."

On Wednesday India's central bank raised a key short-term borrowing rate by a quarter percentage point to 8.0%.

Rising food prices have been spurred by rising fuel costs that have increased production and transport costs.

Loans offered

Asian nations such as India, Malaysia and Indonesia recently cut fuel subsidies in the face of rising world oil prices, which may send inflation even higher.

"Inflation is the most regressive form of taxation and it hits the poor most. In Asia, roughly about a billion people are vulnerable to the food and fuel price increases," Mr Nag said.

He said governments had to ensure "targeted cash support" for the poor to protect them from the price increases, he said.

Asia is home to two-thirds of the world's poor. It cut its poverty rate to about 19% from 33% in 1990, but Mr Nag said this improvement was under threat because of inflation.

In April the Asian Development Bank offered to support countries dealing with the effects of rising food prices.

It said loans could be made available to countries so that they can subsidise the price of staples to help the poor.

Credit Suisse in Chinese venture

Swiss bank Credit Suisse has won approval from regulators to set up a securities joint venture in China.

It will underwrite domestic stock and bond offerings, and joins a handful of foreign investment banks with domestic joint ventures in China.

Credit Suisse will own one-third of its Beijing-based joint venture with China's Founder Securities.

The backing is the first by the China Securities Regulatory Commission since new rules were adopted in December.

Founder Securities Chairman Lei Jie is chairman of the joint venture. Neil Ge, managing director at Credit Suisse's investment banking representative office in Shanghai, while be chief executive officer of the venture.

In April Credit Suisse reported a large loss for the first three months of the year, hit by its exposure to the credit markets.

The bank made a net loss of 2.1bn Swiss francs ($2.1bn; £1.0bn) after writing down 5.3bn Swiss francs in mortgage securities and big buyout loans.

Rivals UBS and Goldman Sachs are among other foreign investment banks with joint ventures in the Chinese market, while Morgan Stanley owns a stake in mainland bank China International Capital Corporation.