Saudis Agree To Boost Oil Production

RIYADH, Saudi Arabia — Saudi Arabia plans to increase its oil production by 200,000 barrels a day next month, the kingdom's oil minister told U.N. chief Ban Ki-moon on Sunday, according to Ban's spokesman.

The U.N. secretary-general met with Oil Minister Ali al-Naimi in the port city of Jiddah during a one-day trip to the world's largest oil producer.

Farhan Haq, a spokesman who is traveling with Ban, said in an e-mail that the U.N. chief said al-Naimi told him Saudi Arabia would increase oil production by 200,000 barrels a day from June to July. In May, the kingdom increased its production by 300,000.

By July, production should be at 9.7 million barrels a day, Haq said.

Ban also said Saudi Arabia understands that the current price of oil, which topped $139 per barrel earlier this month, is not normal, according to the official Saudi Press Agency.

"The king believes that the current oil prices are abnormally high, and he is ready to restore prices to their appropriate levels," SPA quoted Ban as telling reporters in Jiddah. The report carried by SPA was in Arabic, and it did not say what language Ban spoke in.

Saudi Arabia is concerned that sustained high oil prices will eventually slacken the world's appetite for oil, affecting the kingdom in the long run.

The 200,000-barrel-a-day boost is not insignificant _ it will raise Saudi Arabia's daily production by about 2 percent. But to a market that has been sending oil prices soaring to record heights due in part to strong global demand, the move might be seen as marginal.

The oil market largely ignored Saudi Arabia's 300,000-barrel-a-day output increase last month.

In electronic trading on the New York Mercantile Exchange late Sunday, crude oil futures were down 54 cents at $134.32 a barrel.

The kingdom has called for a meeting of oil producing and consuming countries on June 22 in Jiddah to discuss ways of dealing with soaring energy prices.

The New York Times reported on Saturday, citing unnamed analysts and oil traders briefed by Saudi officials, that a production increase of about 500,000 barrels per day was to be announced following the meeting.

On Saturday, al-Naim's adviser told The Associated Press that the minister would address the production increase reports the next day. But on Sunday, the adviser, Ibrahim al-Muhanna, said there was no meeting to address the reports scheduled.

Further attempts to reach al-Muhanna by phone later Sunday went unanswered.

Saudi Arabia, the world's largest oil producer, is concerned that sustained high oil prices will eventually slacken the world's appetite for oil, affecting the kingdom in the long run.

Crude prices have reached record highs, surpassing $139 per barrel on June 6 after surging nearly $11 in the biggest single-day price leap ever.

The prices had receded by Friday, with the benchmark light, sweet crude for July delivery falling $1.88 to settle at $134.86 on the New York Mercantile Exchange. In London, July Brent crude lost $1.84 to settle at $134.25 on the ICE Futures exchange.

The current president of the Organization of Petroleum Exporting Countries, Chakib Khelil, has said that the cartel will make no new decision on production levels until its Sept. 9 meeting in Vienna. OPEC ministers often follow the lead of the Saudis when discussing whether to increase production to take the pressure off rising prices.

Comments

[Raymondf]

I hope they go to 10.00 a gallon, then we can blame Cinton for his veto 10 years ago. If not for the veto, we could already be independent of foreign oil. Now it will take 10 more years if we start drilling today.

[Backatcha]

Raising crude output does nothing to adress the real issue ..refinery capacity

[DontBeFoolish]

Correct Amoundo. Does absolutely nothing. It's like that stupid gas tax holiday thing, a cheap temporary fix. People, you need to. GOOGLE - BRAZILS ALTERNATIVE FUEL, or watch. OUT OF GAS, you were warned on CNN.

It will make you think about how weak we truly look as a Super Power. This nation could of thought this technology up with one eye, one leg and a few fingers. Instead, we have our president going over to Arabia and begging for increase in oil production from the Saudi's, because we are to lazy or to proud to figure out or adopt alternatives.

The Saudi's have our economy by the ?alls, and can squeeze when and if they choose. Also, we just found out that the price increase may be due to speculaters, what's up with that. The alternatives are out there people, they are being kept from us because of GREED. Don't be confusted, stop letting your government run us into the ground. They work for us. Not we work for them. This is our country.

Signed,
Dontbefoolish

[jonmonbuckeye]

Exactly. Want to solve the energy price shock? Nationalize the refineries, eliminate speculation in the crude oil market, especially the Oil Companies hold seats on the exchanges, and withold military goods and services to Middle East countries until OPEC gets serious in bringing the supply component back in line with the actual demand.

[KillTheMessenger]

Can somebody explain to me how we have a refining crisis when we use only 85% of the refinery capacity we have?

[fact finder]

The Saudis can raise production by a million a barrels a day and the price of gas and diesel will not go down much. " The best way to control a population is to control their food , housing, and health." Me.

[LITU]

I Repeat: The U.S. gets out of Iraq, and ceases military posturing against Iran, and the price of crude drops like a rock. 70-80% of the cost is due to speculation. Simple.

[KillTheMessenger]

Dream on.

[mhj555]

Almost time for the election year decrease in gas prices, so this should be no surprise considering that bush puts saudi interests ahead of the interests of Americans.

[KillTheMessenger]

You mean end of summer driving season... but wait for the time when people start buying heating oil. There will be a lot of screaming and swearing. It will be a long, cold winter for many.

[95flhtcu]

I find it interesting that the Saudis tell Bush to get F#@*ed when he was over there begging, then a couple of weeks later, come out and announce that they're doing it on their own. Nothing like a sharp stick in the eye....

[ChristianEcon.com]

They thought better of it after realizing they're about to lose their buds in the whitehouse come Nov.

[mabinog]

Naw, they are just selling it. The Prince can't be seen to stoop for Dubya, but the Republicans need the gas prices down for the election. So the Prince gives Dubya the finger publically and then later does it "on his own".

It is all in how you spread the b.s.

[marymansour]

"The king believes that the current oil prices are abnormally high..."

Ya think? Who twisted his tail?

[karma13612]

Love that phrase "Who twisted his tail'!!

As far as your comment, I agree. Whatever or whoever got him going, I hope we see some relief.
Everyone around the world is hurting, it's not just 'us'.

[Troubledwawa]

I think people in Opec are starting to have visions of what this Republican slaughter is going to mean to them. The Saudi's seem to be acting like they're trying to get their story straight.

Imagine where they'd be if we brought the troops home and said:

"Oh btw, that deal you made with FDR is null and void right now".

[kingcityguru]

Bet they don't ...
Two things the US can do to increase North American production: 1) Drill in Anwar and off the coasts; and 2) change environmental standards that limit the attractiveness of Canada's oil sand production (an area considered to have more all than the mid-East)

Oh yah, build some more nuclear reactors to reach France's 80% of its electricity from nuclear energy and why not throw in a new refinery (the first in 25 years) while you are at it.

[fiduciaryatlarge]

Funny how ALL of the Oil execs told congress recently they didn't need any more refineries. We need to put a solar panel on every roof and a windmill in every yard.

[karma13612]

I agree with the windmills and solar panels. Hubbie and I wanted to put in solar panels, but of course they are soooo expensive, we are stuck just using regular, horrendously expensive electricity. It's really bad how we as consumers are left footing the bill when we really do want change and better energy options.

And, I certainly can't afford a new hybrid or electric car until the prices are more reasonable!

[ChristianEcon.com]

They're getting scared seeing the Republican friends' reign about to end along with their gravy train.

[Kalima]

GB must have thrown a tantrum.
"But....but, I thought your were my friends?"

[peacekitten]

the saudis have discreetly made it known in no uncertain terms that the price they desire a barrel of oil to be is around $50. high enough for them to continue to make enormous profits, but low enough to support a stable market.

drilling in the north american continent would not make any difference whatsoever to the situation. if we were talking about the texas oil fields of the 1950s, that would be a different story. but we aren't.

the ONLY way we are going to get out of this mess once and for all, render the issue of control over the middle east and OPEC moot, is to put as much energy into development of alternative fuels sources as quickly as possible. if we can put out this much effort to maim, kill and destroy, we should be capable of putting out at least half that for a solution that would restore our economic dominance, and make us less vulnerable to the whims of other countries. not to mention that if we ever have another retarded shrub in office again, we can make our apologies to the offended nations some other way than bombing the living daylights out of them.

[AutumnRecluse]

Yes, we need to get off of the oil standard but that will cost a lot of money in research and subsidies for innovative companies. If the price of oil destroys our economy for the next five years then how can we invest in the alternative fuels needed to remove the middle eastern influence on our country?

[peacekitten]

what do you think we are doing now but paying through the nose for so-called "exploration and development?"

an equitable tax system on those who have wriggled out of it for far too long while raking in obscene amounts of cash would be a good place to start for raising funds for "research and development."

[collprof]

Agreed. Where is the Manhattan project for alternative fuel? If we, as a nation, had missions to bomb our enemies during WWII and for sending men to the moon in a decade why have we not devoted the same resources to get this nation off of fossil fuel and onto other fuels without destroying food production and the like.

Other countries with less resources have accomplished just that while our country conducts secret energy meetings and allows the likes of Enron to rape a state. We have also killed legislation for subsidies to solar and wind initiatives.

Why must this powerful nation only now address what has been a growing problem since the last time we went through an energy crunch and rising prices? Bush states opening ANWR is a short term solution. Destroying an enviroment is not a solution but committing this nation to a full blown Manhattan project for alternative energy is.

[CuriousPerson]

If the prices seem 'unusually high' then increasing production won't do anything to bring them back to normal will it?

If supply and demand ( a bunch of c r a p to begin with, but that's a different discussion) is not the problem, how could increasing the supply solve the problem?

[AutumnRecluse]

Supply and demand are concepts that describe how prices are set in a capitalistic society. The price of oil is "unusualy high" because speculators are betting on the fact that oil production will not signifigantly increase over the next several years. If we increase domestic oil production we can destroy speculation on that trend which will bring oil down to the price it should actually be.

[CuriousPerson]

Supply and demand is another term for greed, plain and simple, but moving on, speculators are fueled by greed.... do they only speculate on oil? Don't they speculate on food items etc...?

Speculators are fueled by greed, the higher the price of the commodity they're speculating on, the higher their profits will be, do you think if the supply is increased, like it was in May, out of the goodness of their heart, they're going to forget about oil and shift to , say, granola bars?

[mhoiles]

Speculate on oil being obsolete ....

[AutumnRecluse]

Imagine how low the oil prices would go if we were to increase domestic production. It would literally destroy the speculation market.

[CuriousPerson]

How so?

Explain!

[AutumnRecluse]

The current price of oil is based on an assumption that supply will be less than or even with demand over the next several years. If the U.S. were to increase domestic production it would increase supply and destroy that line of thinking. Speculators would no longer be able to justify gambling on higher future oil prices if supply increases faster than demand.

[AutumnRecluse]

Imagine how low oil prices would go if congress authorized new oil wells and refineries. We live in a modern era now where we can extract resources from the Earth without doing signifigant damage to the Earth. We need to buy ourselves about 10-15 years so that we can develop alternative fuels. We need to increase supply as soon as possible. If congress even remotely hinted that future supply would trend upward the careless speculation would end!

[CuriousPerson]

That is the biggest load of c r a p I've seen all day.

[AutumnRecluse]

It is one thing to say crap, it quite another to post a reasonable counter argument that supports your exclamation.