Saudis may hike oil production

www.miami.com Posted on Wed, Jan. 22, 2003 Associated Press

WASHINGTON - Saudi Arabia's ambassador to the United States said Wednesday that his country was prepared to increase its oil output if world prices do not drop below $28 a barrel in the next few weeks.

The ambassador, Prince Bandar, made the statement in a question-and-answer session at the U.S. Conference of Mayors meeting. He did not say how much additional oil his government was ready to export.

Saudi Arabia provides the United States with 1.6 million barrels of oil a day, ranking first in imported oil. The price of crude for February delivery climbed above $35 per barrel Tuesday before settling at $34.61, the highest closing price since Nov. 30, 2000.

For weeks, oil prices have been above $30 a barrel because of the cutoff of supplies from Venezuela and fear of an impending war in Iraq.

Saudi Arabia and other OPEC members have said they would like to gear production levels to keep world prices in the $22 to $28 a barrel range. Higher prices, if sustained, could hurt the world economy and producers in the long run.

Last week, the Organization of Petroleum Exporting Countries, a cartel that controls oil prices, decided to boost crude output by 1.5 million barrels a day.

The action, taken by Saudi Arabia and other oil-rich countries, was viewed as an attempt to reassure markets roiled by the situations in Venezuela and Iraq.

Saudi Arabia is among the few OPEC nations with the capacity to make large boosts in oil production.