After a meeting with Saudi Arabia's oil minister, UN Secretary General Ban Ki-moon said the world's largest oil exporter had agreed to boost output to the fastest rate in decades in a bid to meed demand and control soaring fuel prices.
DUBAI - The world's top oil exporter Saudi Arabia will boost output next month to the fastest rate in decades to help keep pace with demand and tame what it sees as unacceptably high fuel prices.
Riyadh plans to lift output to 9.7 million barrels per day (bpd) in July, United Nations chief Ban Ki-moon said on Sunday after meeting Saudi Oil Minister Ali al-Naimi.
That would be a rise of 550,000 bpd or over 6 percent since May and would take Saudi crude output to its highest monthly rate since August 1981, according to U.S. Energy Information Administration data.
"9.7, that is what he (Naimi) said," on July output, the Abu Dhabi-based The National newspaper quoted the UN Secretary General as saying on its website.
The Saudi output plan comes to light a week before the kingdom hosts an unprecedented meeting of producers and consumers to tackle market instability.
A relentless rise in oil prices to well above $130 a barrel has sparked fuel protests from Asia to Europe and roiled financial markets as policymakers fear higher inflation will slow the global economy.
Saudi King Abdullah told Ban that Riyadh would do its utmost to bring the price down.
King Abdullah "sees that oil prices are currently abnormally high and he is willing to do all that is possible to bring prices to their appropriate levels," state news agency SPA quoted Ban as saying after meeting the Saudi monarch.
Saudi Arabia has already increased supply by 300,000 bpd this month from May to meet demand from buyers primarily in the United States.
ENOUGH TO LOWER PRICE?
But a higher daily rate of 9.7 million may not be enough to dent the price, said David Kirsch of Washington-based consultancy PFC Energy.
"If they want to put pressure on prices they need substantial price discounts that would encourage greater stock building," he said.
Oil fell nearly $2 a barrel on Friday after industry newsletter the Middle East Economic Survey reported Riyadh was considering a sizeable output increase to near 10 million bpd.
U.S. crude has more than doubled in a year to strike a record $139.12 a barrel earlier this month.
The sky-rocketing price has led many countries -- including top consumer the United States -- to call on the Organization of the Petroleum Exporting Countries, and Saudi Arabia in particular, to boost output.
Supply plans by core OPEC members could see exports from the Gulf rising by close to one million bpd this month and next.
U.S. Treasury Secretary Henry Paulson warned on Saturday that oil's rally could prolong the U.S. economic downturn.
The kingdom is also concerned about the effects of costly oil and intends to address the issue at its hastily convened meeting on June 22 in Jeddah.
"I don't know if the Jeddah meeting will reverse the trend of rising oil prices, but it will certainly show that Saudi Arabia and OPEC are making every effort not to be the cause of the problem," said an oil industry expert.
Saudi Arabia is the only member of OPEC with the spare capacity to boost supplies quickly and significantly. It could pump around 2 million bpd more than it does.
Date created : 2008-06-15