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Thu, Jul 01, 2004 - Page 12 News List

Output levels adequate: Saudis

MARKET BALANCE The kingdom has been producing 9.1 million bpd for the last month in a bid to lower prices. Its oil minister appears content to maintain that level

REUTERS , RIYADH

Top world oil exporter Saudi Arabia, which has boosted supply to cool prices, believes the market has now fallen to a fair value and sees no reason to change its production level, Saudi Oil Minister Ali al-Naimi said yesterday.

"I believe the current prices are fair and there is no reason to take any measures either to decrease or increase the production," he told reporters in Riyadh.

Saudi Arabia has been producing 9.1 million barrels per day (bpd) since the start of last month in a bid to cool 21-year high oil prices.

The higher output has helped replenish crude inventories and pulled US crude down about US$6 or 15 percent from a peak early last month at US$42.45 a barrel.

The price surge drew urgent calls from consuming nations for extra supply from OPEC producers to stop higher energy costs damaging economic growth.

OPEC officially targets a US$22 to US$28 a barrel range for its reference basket of crude oils but the basket price has been well above the range for the whole year.

The basket was last valued at US$32.50 a barrel.

Saudi sources have said the kingdom will continue to pump 9.1 million bpd this month, well above its official OPEC production quota of 8.288 million bpd.

OPEC meets in three weeks time to review a planned 500,000 bpd increase in the cartel's formal 25.5 million bpd production target from next month.

Asked if it was still necessary for OPEC producers to implement the increase in the light of the recent price fall, the minister said: "We will reply to this when we meet on July 21st."

Chinese efforts to slow runaway economic growth have helped pull oil prices lower, while in Iraq, this week's handover of power has fed optimism of a slowdown in repeated sabotage attacks that have restricted Iraqi oil exports.

Analysts warn prices a major attack on oil facilities could quickly push prices back up again as the higher Saudi supply has reduced the world's spare production capacity.

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