Oil prices

Saudi Arabia to increase oil output

Article published on the 2008-06-16 Latest update 2008-06-16 08:17 TU

A Saudi oil production facility.
(Photo : AFP)

Saudi Arabia will be increasing its crude oil production by 200,000 barrels per day in an effort to curb soaring oil prices, UN Secretary General Ban Ki-moon said late Sunday. Ban announced the hike after returning from a 24-hour visit to the country, where he met with top officials and members of the royal family.

The production increase, which should come into effect in July, comes on the heels of a previous boost of 300,000 barrels per day that came into effect this month.

Ban also reported that the Saudis would like to see their efforts reciprocated in oil-importing countries, which should cut oil taxes and fight speculation. To this end, the Saudis will be hosting a conference of oil producers and consumers in Jeddah on 22 June.

Oil prices hit a record high of nearly 140 dollars (91 euros) on 6 June, more than doubling in a year and marking a five-fold increase since 2003. These prices have been adversely affecting fuel-consuming industries such as trucking and fishing.

Protests in both these sectors, which have high levels of small businesses, have broken out across Europe and Asia recently.

While these skyrocketing prices have been bringing windfall profits for the Middle Eastern oil giant, the Saudis are concerned that high oil prices will dampen world economic growth and lead to lower oil demand, as has been the case in the United States recently.

The Saudis are also worried that “abnormally high” oil prices could make alternative fuels more attractive and threaten the long-term prospects of their oil-dependent economy.

Saudi Arabia is the largest producer in the Organisation of Petroleum Exporting Countries (Opec) and currently pumps out just over nine million barrels per day, according to the International Energy Agency.