Saudis want oil output increase

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Saudis want oil output increase By Roula Khalaf in London and Hillary Durgin in Houston Published: August 30 2000 20:28GMT | Last Updated: August 31 2000 15:41GMT

Saudi Arabia, the world's leading oil producer, is signalling the need for joint action by oil producers and consumers to tackle surging oil prices.

A senior member of the Saudi Royal family said the high prices should not be blamed solely on producers.

Speaking in London ahead of Wednesday's meeting of the Saudi Supreme Petroleum Council, Prince Nawaf bin Abdulaziz, one of the senior brothers of King Fahd, told the Financial Times high oil prices were not in the kingdom's long-term interests.

He denied that efforts to bring prices down were due to US pressure. But he recognised that attempts to increase production had neither solved the problem nor alleviated the burden on ordinary consumers.

"There is a need for a general policy between [industrialised consuming] countries and exporters to reduce the burden on ordinary consumers," he said. "Ordinary consumers must understand the reason for the increase in the oil price . . . the reality is that the increase in oil production is not affecting them," he added.

His comments came as the Saudi Supreme Petroleum Council, chaired by King Fahd, said instructions had been given to Ali al-Nuaimi, the oil minister, to work with other members of the Organisation of Petroleum Exporting Countries (Opec) "towards a suitable increase" in output. The cartel holds its next meeting on September 10.

The Saudi statement comes amid rising fears that persistently high oil prices could lead to an economic slowdown in the US and Europe but continued resistance to an increase from other Opec members.

Analysts said the Saudi stance was too vague and would disappoint the markets, which are looking for a signal that the kingdom, which alone has excess oil capacity, will take a strong, unilateral position.

Despite several output increases, prices have continued to climb. The benchmark brent Crude for October was down 5 cents on Wednesday afternoon at $31.31.

Prince Nawaf does not have an official position in the Saudi government, but he is known to be close to Crown Prince Abdullah, who is running the day-to-day affairs of the kingdom.

"The basis of the Saudi Arabian position is that it is not in the interest of producers for oil prices to reach levels that are too high," he said, signalling that this could backfire on exporters by promoting alternative sources of energy.

"The US asks producers to lower prices and now they have an election year and want to show that something is being done . . . But this is the domestic Saudi position, which has in mind the Saudi economy."

The kingdom said last month it would unilaterally put an extra 500,000 barrels per day of oil on the market, but it sold only about half that amount.

Prince Nawaf suggested there was no point in further increases because the market had not reacted.

Although the unilateral Saudi production increase highlighted strong divisions within Opec, Prince Nawaf insisted the kingdom remained committed to co-operation in the cartel. "No one has an interest in disunity in Opec but this has to have the objective of helping the world economy, not undermining it," he said. Additional reporting by Matthew Jones in London

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3XPFIDJCC&live=true&useoverridetemplate=ZZZ99ZVV70C&tagid=ZZZGXV4R00C&subheading=global

-- Martin Thompson (mthom1927@aol.com), August 31, 2000

Answers

This guy thinks high oil prices are not affecting anybody? Boy, what a dream world he lives in. Today's announcement that July's "New Factory Orders," a leading economic statistic, was DOWN by 7 1/2%--THE BIGGEST DROP EVER--should be telling us something about the shape of the economy soon coming up.

If this isn't a precursor of what's to come, I don't know what is.

-- Jackw (jpayne@webtv.net), August 31, 2000.


I paid $1.89.9 today at the pump, the highest i have ever paid for a gallon of gasoline.

-- Loner (loner@bgfoot.com), August 31, 2000.

I don't think there is any doubt that gas prices are gearing up to take off again. At least, there is no doubt in my mind.

-- Uncle Fred (dogboy45@bigfoot.com), August 31, 2000.

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