Sun, Jun 15, 2008 - Page 11 News List

Saudis to raise production by half-million barrels


Concerned that skyrocketing oil prices might induce a worldwide economic slump, Saudi Arabia is planning to increase oil production next month by about a half-million barrels a day, the New York Times reported on its Web site on Friday.

Citing unnamed analysts and oil traders who have been briefed by Saudi officials, the newspaper said the increase could bring Saudi output to a production level of 10 million barrels a day.

The move is seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices, the report said.

While they are reaping record profits, the Saudis are concerned that today’s record prices might eventually dampen economic growth and lead to lower oil demand, as is already happening in the US and other developed countries, the Times said.

The current oil prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy, the paper said.

Saudi Arabia is currently pumping 9.45 million barrels a day, which is an increase of about 300,000 barrels from last month. Crude oil prices slipped on Friday on a firming dollar and signs of slowing demand ahead of an exceptional international oil summit in Saudi Arabia next weekend.

New York’s main oil futures contract, light sweet crude for July delivery, shed US$1.88 to close at US$134.86 a barrel.

OPEC on Friday cut its estimate of growth in world oil demand for this year, as high prices and slower economic growth brake demand in major industrialized countries, the US in particular.

Global oil demand was now projected to rise by 1.28 percent this year, OPEC said in its latest monthly report, lowering its prior estimate of 1.35 percent.

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