Saudi will increase oil output to cut prices
JEDDAH, Saudi Arabia (CNN) — Saudi Arabia will increase its daily oil production from 9 million barrels to 9.7 million in the near future to counter the sharp rise in international oil prices, Saudi King Abdullah said Sunday.
The country’s petroleum minister, Ali I. Al-Naimi, said that increase will take place in July.
It would be Saudi Arabia’s highest production rate since 1981.
White House Deputy Press Secretary Tony Fratto praised the step, saying, Any increase in production in today’s oil market is welcome. It is important that we also take steps to increase domestic production and our refining capacity.
Al-Naimi also said the government will invest in oil projects that would allow the nation to produce 12.5 million barrels per day by the end of the year.
King Abdullah’s announcement came at the end of the Jeddah energy summit, where he also called for OPEC to set aside $1 billion for a strategy to ease the oil price crisis.
He said $500 million should be given to developing nations to help them get the energy they need.
King Abdullah said there are many factors that made oil prices high. Along with increased demand, he also cited oil speculators and an increase in taxes in consumer nations.
Now we see a lot of people point the finger at OPEC as it is solely responsible for this, he said.
His comments came one day after U.S. Energy Secretary Samuel Bodman, attending the summit, said that oil kept hitting record highs because production has not kept pace with increasing demands.
All nations must be better at conservation, and the U.S. is at the top of that list, said Bodman.
Some observers have blamed speculators for driving up oil prices. A key adviser to Saudi Arabia’s oil minister said Friday that a number of factors, including speculators and currency fluctuations, are to blame for rising oil prices.
We need stability, Dr. Ibrahim al Muhanna said, adding that Saudi Arabia would like to see producers, consumers and distributors cooperate.
But Bodman said he did not believe that they are the cause. Since 2003, he said, global demand for oil has increased because of industry in China, India and the Middle East. But from 2005 to 2007, there was very little increase in supply.
Nations need an additional supply of energy to market, whether that energy is nuclear, coal, fossil fuels, solar or wind power, Bodman said.
But, we spent 30 years digging ourselves into this hole, he said. It won’t be solved soon.
On Wednesday, U.S. President George Bush asked Congress to permit drilling for oil in deep water off the U.S. coast to combat rising oil prices.
