Saudis Urge OPEC to Hike Oil Output

Press enter to search
Close search
Open Menu

Saudis Urge OPEC to Hike Oil Output

RIYADH, Saudi Arabia -- Saudi oil minister Ali Naimi urged OPEC on Monday to raise its production maximum by at least 1.5 million barrels per day when it meets on June 3, reported the Associated Press.

The announcement by OPEC's largest producer comes as United States prices have risen to nearly $40 per barrel and gasoline prices have been pushing higher with the peak summer driving season approaching. OPEC pumps about a third of the world's oil.

"It is certain that the kingdom believes that increasing the OPEC production ceiling is essential to keep supply and demand balanced," Naimi said in a statement.

Naimi's statement represents a shift in Saudi oil policy. In March, the kingdom reportedly was the chief advocate of a decision by OPEC to cut production in anticipation of a lower demand for oil during the spring and summer. OPEC currently has an official ceiling of 23.5 million barrels per day.

Naimi said he would discuss the market situation with other OPEC members May 22 through 24 at the International Energy Forum in Amsterdam. OPEC's June meeting will be held in Beirut.

Recent price increases were a "major concern" to Saudi Arabia, Naimi said. "We do not want to see prices rise to the level that they negatively affect the growth of the international economy or the demand for oil."

The most important reason for higher oil prices, he noted, is "the market's unwarranted fear of disruptions in supplies from some oil producing countries and regions at a time when only the kingdom and probably two or three other countries have spare production capacity."

Market speculation is another factor, he added. Traders are holding long-term contracts for commodities such as oil because economic growth is robust and interest rates are low.

Last week, traders said they were increasingly worried about the possibility of attacks against petroleum industry targets in the Middle East at a time when supplies are tight and demand is strong.

On Friday, oil for June delivery rose as high as $40 per barrel on the New York Mercantile Exchange before settling at $39.93 -- the highest level in over 13 years, according to the AP.