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Saudi Arabia to increase oil production

Latest update : 2008-06-17

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.

UN chief Ban Ki-moon arrived in London late Sunday after a 24-hour visit to Saudi Arabia during which he was assured the OPEC powerhouse would further increase oil output to meet heightened demand from its customers.

On the flight from Jeddah, Ban told reporters that he had just spoken to Saudi Oil Minister Ali al-Nuaimi by telephone, who told him that Riyadh would raise production by 200,000 barrels a day in July in addition to a hike of 300,000 barrels made in June.

He said the minister sought to clarify earlier media reports suggesting that Riyadh could raise output in July by about half a million barrels a day to 10 million barrels.

"The Saudis did increase production in June by 300,000 barrels. For the month of July, it will be an increase of 200,000 barrels more in response to requests from customers," Ban said, citing his conversation with al-Nuaimi.

"They (the Saudis) will respond positively whenever there is a request from their customers, so there is no shortage," he added. "They don't want to be blamed" for the fallout of the soaring oil prices.

But Ban also quoted al-Nuaimi as saying that he felt oil-consuming countries should also play their part to stabilise prices by bringing down national taxes and combating speculators.

The UN boss said this was why the Saudis were hosting a high-level meeting of oil producers and consumers in Jeddah on June 22.

During his 24-hour visit at the Saudis' invitation, Ban also held talks with King Abdullah, Foreign Minister Saud al-Faisal and Crown Prince Sultan Abdul Aziz al-Saud.

He said they shared the concern he expressed about the impact of the skyrocketing oil prices on global food security.

He said he also told them the oil price surge was threatening the ability of the least developed countries to achieve the poverty-reduction Millennium Development Goals and the world's capacity to deal with the threat of climate change.

Earlier Sunday in the Red Sea port city of Jeddah, Ban told reporters the Saudis, whose desert kingdom is the largest oil producer in OPEC, viewed oil prices as "abnormally high" and were willing to bring them down.

He said his talks on Saturday with King Abdullah had focused on the link between the soaring world crude prices and the worsening food crisis as well as climate change.

"He (Abdullah) acknowleged that the current oil prices are abnormally high due to speculative factors and some other national government policies," Ban said.

"He is willing to do what he can to (bring) the price of oil to adequate levels."

The Saudis "seem to be considering very seriously how they can address this issue by increasing production," Ban said.

"I expect that they will take some concrete measures."

While reaping record profits, the Saudis are concerned record prices might dampen economic growth and lead to lower oil demand, as is the case in the United States and other developed countries, The New York Times reported.

It said the high prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy of Saudi Arabia, which is currently pumping 9.45 million barrels a day.

OPEC on Friday cut its 2008 estimate of growth in world oil demand, as high prices and slower economic growth put a brake on demand in major industrialised countries, the United States in particular.

Global oil demand was now projected to rise by 1.28 percent in 2008, it said in its June monthly report.

Oil prices -- which have witnessed a fivefold jump since 2003 -- fell back on Friday to just under 135 dollars a barrel.

The Group of Eight (G8) finance chiefs from major industrialised nations have called for an investigation by the International Monetary Fund into the wild swings in energy prices.

Runaway oil prices and the high cost of food pose "a serious challenge to stable growth worldwide" and may worsen poverty and stoke global inflation, the G8 said in a statement Saturday capping two days of talks in Osaka, Japan.

In Berlin, German Economy Minister Michael Glos warned in an interview published Sunday that record oil prices could lead to job losses in Europe's biggest economy.

"Continuously high energy prices will affect private consumption. This will translate into weaker economic growth," Glos told the Bild am Sonntag newspaper.

Ban flew to Jeddah Saturday aboard a Saudi Arabian Airlines Boeing 777 provided by Abdullah, a day after he held wide-ranging talks with British Prime Minister Gordon Brown and was feted on his 64th birthday at a Buckingham Palace reception hosted by Queen Elizabeth.

Monday, he was to hold talks with British officials before attending a ceremony marking the 60th anniversary of the London-based International Maritime Organisation.

Date created : 2008-06-16