JEDDAH, Saudi Arabia (Reuters) – Eight-cylinder luxury cars will rumble along Jeddah’s highways guzzling cheap Saudi gasoline as energy powers hold emergency talks in the Red Sea port this weekend to brake the free-wheeling rise in oil prices.

Top exporter Saudi Arabia appears unlikely to orchestrate a hike in supplies from the Organization of the Petroleum Exporting Countries (OPEC), but the kingdom may formalize plans to raise its output to the fastest rate in decades.

Consumers and producers blame each other for the rally and failed even to agree the price was too high at a meeting two months ago in Rome when oil cost $120.

Riyadh summoned both sides and chief executives from big oil firms to meet on Sunday after an unprecedented day of trading sent a shock through the market on June 6. U.S. oil rose 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 nearly $140 a barrel, sparking protests from Brussels to Bangkok over record fuel costs that threaten the world’s economy.

Saudi King Abdullah told UN Secretary General Ban Ki-moon last Sunday that the kingdom would do everything it can to bring “abnormally high” oil prices to “adequate levels.”

The market is waiting to see what that means.

“The question is now do they do something about it other than blame speculators? We’re looking for more barrels instead of an invitation to Jeddah,” said Adam Sieminksi, chief energy economist at Deutsche Bank.

Oil Minister Ali al-Naimi told Ban that Saudi Arabia would raise oil output to 9.7 million barrels per day in July, its second output rise in two months and the highest Saudi output since August 1981, according to U.S. statistics.

Consuming nations such as Britain want more from OPEC, the source of over a third of the world’s oil. But the world’s largest consumer the United States said that it expects no announcements on increased oil output from Jeddah.

OPEC hawks Iran and Venezuela say they have no plans to review output levels until the group next meets in September. Venezuela is snubbing the Jeddah meeting.

Officials from the producer group say oil supplies are adequate and blame the high price on warmongering over Iran’s nuclear program, massive investment flows into commodities and the slump in the U.S. dollar.

“I don’t think increasing any amount in the international market will have a significant impact on the prices,” Iraq’s Oil Minister Hussein al-Shahristani told Reuters this week.

SPARE CAPACITY

There is little that most other producers can do for supply as Saudi Arabia holds most of the world’s spare capacity.

Limited extra capacity and the potential for demand to outstrip supply in years to come have helped drive oil’s rally.

Investors expect oil consumption in China, the Middle East and other emerging economies to more than outweigh slower consumption from the West while additional supply from countries outside OPEC has been slow to materialize. Supply is falling rapidly in mature producers such as Britain and Mexico.

“Many people’s supply-demand models for 2010 and beyond are out of balance,” Sieminksi said. “The futures market is sending a message to the physical market. Either you slow demand and increase supply or prices are going to go a lot higher.”

Saudi Arabia, holder of over a fifth of the world’s oil reserves, has yet to mobilize to boost capacity further beyond a program due to conclude next year to lift output potential to 12.5 million bpd.

Longer-term capacity commitments from Saudi and other producers might help, Sieminksi said.

Other big producers both within and without OPEC have struggled to map future increases. Sanctions have constrained international investment in Iran, the second-largest oil reserve holder. Violence and politics have held back output from the next largest reserve holder, Iraq.

Subsidies may be on the Jeddah agenda. So will speculation. OPEC blames speculators for inflating oil’s rally and adding to volatility and wants increased regulation of futures markets.

Investment funds have pumped billions of dollars into oil markets as they look to diversify holdings and flee other poorly performing asset classes. “How do you divide investment from speculation?” said a senior trader at a major western oil company. “We’re all in it to make money.”

U.S. regulator the CFTC, under pressure from lawmakers, has announced a task force to explore commodity activity. It also announced a deal this week with its British counterpart to limit trading on oil futures on London’s ICE exchange.

Oil market observers question whether very much can be done in Jeddah in the short-term to bring oil down.

British Energy Minister Malcolm Wicks said he wanted consumers and producers to at least agree on what was causing higher prices. That would facilitate a longer-term plan to address the price and future energy use.

“Lots of taps won’t be turned on after Jeddah,” he said. “But we don’t want it to be a talking shop. Something substantial has to come out of it.”