Saudi oil minister says kingdom can produce more crude

US had hoped for specific increase

JIDDAH, Saudi Arabia - Facing strong US pressure and global dismay over oil prices, Saudi Arabia said yesterday it will produce more crude this year if the market needs it. But the vague pledge fell far short of US hopes for a specific increase, and may do little to lower prices immediately.

For now, the "oil shock" leaves Western countries with little choice but to move toward nuclear power and change their energy-consumption habits, Britain's prime minister warned at a rare meeting of oil-producing and consuming nations.

Saudi Arabia - the world's top crude exporter - called the gathering yesterday to send a message that it, too, is concerned by high oil prices inflicting economic pain worldwide.

Instead, the meeting highlighted the sharp disagreement between producers like Saudi Arabia and consuming countries like Britain and the United States over the core factors driving steep price hikes. Oil closed near $135 a barrel on Friday - almost double the price a year ago.

The cost of gasoline also has become a sore point in the US presidential race, with President Bush and presumed Republican nominee John McCain calling on Congress to lift its longstanding ban on offshore oil and gas drilling. Barack Obama, the presumptive Democratic nominee, has said such moves will do nothing to ease American consumers' pain in the short term.

The United States and other nations say oil production has not kept up with increasing demand, especially from China, India, and the Middle East. But Saudi Arabia and other Organization of Petroleum Exporting Countries say there is no shortage of oil, and blame financial speculation and the falling US dollar.

Saudi Oil Minister Ali al-Naimi said the kingdom is willing to produce more than the 9.7 million barrels of oil a day it had planned to produce in July - if the market requires it. But Naimi also blamed speculators and asserted that supply is not the problem.

"In today's environment, I am convinced that supply and demand balances and crude oil production levels are not the primary drivers of the current market situation," Naimi said. Officials and energy executives from more than 35 countries thronged a large hall where he spoke.

King Abdullah also said Saudi Arabia is not the culprit. The king cited several factors driving "the unjustified, swift rise in oil prices," including "speculators who play the market out of selfish interests," plus higher consumption by developing countries and higher taxes in some countries.

US Energy Secretary Samuel Bodman said earlier that US officials found no evidence speculators are driving up prices.

Saudi officials have said the country would provide enough oil to supply the market. The kingdom announced a 300,000 barrel per day production increase in May, and said before the start of the Jiddah meeting that it would add another 200,000 barrels per day in July, raising total daily output to 9.7 million barrels.