PM calls for oil price stability

Gordon Brown has arrived in the Middle East to ask Gulf states to help stabilise oil prices and to contribute to tackling the global economic crisis.

Speaking ahead of the visit, he said Gulf states had an interest in a "well functioning economy".

And he said they had an interest in a "stable energy price" not in "massive volatility" that had been seen.

Mr Brown is being joined in Saudi Arabia by Energy Secretary Ed Miliband and Business Secretary Peter Mandelson.

'Begging bowl'

The UK prime minister held talks with Saudi ruler King Abdhullah at the King"s Palace in Riyadh.

He was expected to stress the Gulf nations must maintain their oil production levels to avoid "spikes" in oil prices.

"Everybody has got a part to play in solving this world downturn and I think the oil-rich states will want to play their part"
Gordon Brown

Before his departure, he denied he would be going with a "begging bowl" and said the trip would aid British families.

"My main focus is how we can help British families through this downturn, but because these are global problems they require global solutions.

"The Saudis and other countries in the Gulf states are very important.

"They are the countries with oil revenues; they are the countries that need to help."

Mr Brown said restoring stability around the world would benefit the wealthy oil-producing countries.

"Everybody has got a part to play in solving this world downturn and I think the oil-rich states will want to play their part," he said.

He said his plan was for a "greater co-ordination" of policies and hoped the talks would result in the countries working together to deal with a variety of situations.

He said the issues included tackling problems preventing banks from lending money, making progress on world trade and reforming the world's financial system.

"Now if we can do these things we restore confidence into the banking system and into the whole financial system.

"So what starts with negotiations in Saudi Arabia and elsewhere can end with far greater security and safety for families and businesses in Britain."

His visit comes amid concerns the International Monetary Fund's $250bn (£155bn) reserves may not be enough for future bail-outs of struggling states.

The fund has already allocated around $30bn (£18.6bn) in emergency loans to Iceland, Hungary and Ukraine, and Pakistan has signalled it may apply for aid within the next fortnight.

In contrast, members of the oil producers' cartel Opec, are estimated to have more than $500bn (£311bn) in foreign exchange reserves.

The growing importance of Middle East capital was highlighted on Friday when it emerged British bank Barclays raised £7.3bn from investors in the region to shore up its position.

'Significant wealth'

A Downing Street spokesman said the prime minister was also expected to urge the Gulf states to invest in renewable energy sources "over the longer term".

But he denied the West was going "cap-in-hand" to the Middle East in a bid to shore up the IMF reserves.

"The Gulf states are in a position as states with significant wealth, significant resources that they can contribute to the refinancing and stability of the financial system."

The visit is understood to be part of the preparations for a summit on forging new international financial rules, to be held in the US on 15 November.