<i>NY Times</i>: Riyadh to increase oil production

Saudi Arabia to produce half a million more barrels per day following pressures from US, Europe.

Saudi King Abdullah 248.88 (photo credit: AP [file])
Saudi King Abdullah 248.88
(photo credit: AP [file])
Saudi Arabia is planning to increase its oil production output next month by about a half-million barrels a day, beginning in July, the New York Times reported Saturday. Quoting analysts and oil traders who have been briefed by Saudi officials, the paper said the increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom's highest ever. The decision was seen as a sign that Riyadh, the world's biggest oil exporter, is becoming increasingly nervous about both the political and economic ramifications of spiraling oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests across the globe. Saudi Arabia has already increased its output to 9.45 million barrels a day, about 300,000 barrels per day more than last month's figures. While oil producing countries are currently reaping record profits, the Saudis are concerned that continuously high prices might eventually damp economic growth and lead to lower oil demand, while also also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy. The decision comes after pressures by US President Goerge W. Bush, who pleaded with King Abdullah to step up production in two visit he made to the peninsula this year. While the Saudis resisted the calls then, arguing that the markets were well supplied, they seem to have since concluded that they needed to disrupt the momentum that has been building in commodity markets, sending prices higher. Last week, King Abdullah also took the unprecedented step of arranging on short notice a major gathering of oil producers and consumers to address the causes of the price rally. The meeting will be held on June 22 in the Red Sea town of Jeddah.