June 17, 2008

Saudis Will Increase Oil Production 2 Percent

RIYADH, Saudi Arabia - Saudi Arabia plans to increase 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 Mr. 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 Mr. Ban, reported in an e-mail that Mr. al-Naimi said 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, Mr. Haq said.

"The king believes that the current oil prices are abnormally high, and he is ready to restore prices to their appropriate levels," the official Saudi Press Agency quoted Mr. Ban as telling reporters in Jiddah.

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, in part because of strong global demand, the move might be seen as marginal.

The oil market largely ignored Saudi Arabia's 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 June 22 in Jiddah to discuss ways of dealing with soaring energy prices.

Originally published by Associated Press.

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