Energy secretary says world's largest oil producer pledges to pump more oil in June.
May 23, 2004: 6:56 PM EDT
AMSTERDAM (CNN) - Saudi Arabia has agreed to increase its oil output starting next month by 28 percent and is "prepared" to increase output to its capacity of 10.5 million barrels per day, U.S. Energy Secretary Spencer Abraham said Sunday after meeting with the Saudi oil minister.
Abraham said the Saudis will boost their production from nearly 7.1 million barrels per day to 9.1 million.
Abraham said Oil Minister Ali al-Naimi agreed to the increase as OPEC ministers were meeting here to discuss rising oil prices and renewed calls from the United States to increase production.
"I had a very constructive meeting today with the Minister Naimi, who indicated to me, consistent with public statements that had been made by other leaders in his government over the last couple of days, that Saudi Arabia is fulfilling all genuine requests for the month of June for a total of 9.1 million barrels a day," Abraham told reporters.
"He also stated that -- going forward -- they will meet all requests up to their full capacity of 10.5 million barrels a day. I think this was a very important comment on his part."
The pressure on OPEC increased Sunday as financial ministers from the world's leading industrialized nations gathered in New York and issued a joint statement calling for more oil from the world's producers.
The Organization of Petroleum Exporting Countries controls about 40 percent of the world's production and about two-thirds of the world's oil reserves, according to the US Energy Information Administration. Its members include Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
OPEC Director-General Purnomo Yusgiantoro told reporters Saturday, the first day of the three-day informal meeting, that the organization is "deeply concerned" about the rise in prices.
When the group meets formally in Beirut on June 3, Purnomo said, the ministers will "do what we can do to assure market stability."
Abraham said the Saudis will boost their production from nearly 7.1 million barrels per day to 9.1 million -- a 28 percent increase.
Before the announcement, Abraham had said that "strong action is required" to bring down oil prices, which would translate into lower gasoline prices.
The United States is the world's largest consumer of oil, and record gasoline prices have spiraled into a key campaign issue for President Bush.
Iranian Oil Minister Bijan Namdar Zangeneh said the pressure to boost production was related to November's upcoming presidential election in the United States.
"We had the situation like it four years ago where we were very close to another presidential election in the United States," he said. "Every day we are going to be closer to this date, we will have some pressure ... to do something and to satisfy their voters."
Oil analysts told CNN that OPEC has already raised production previously, a move that did not provide a long-term solution.
One of the biggest factors behind the price surge, analysts said, is limited U.S. refining capacity. The United States has had to import large amounts of gasoline -- crude oil refined elsewhere -- thereby increasing the strain on the overall oil market, the analysts said.
Many U.S. refineries have shut over the last two decades, and the operating ones face environmental regulations. But Abraham rejected suggestions that U.S. refinery capacity is to blame for the price hike.
"The big difference is not U.S. refinery capacity, it's world demand," he said.
Purnomo said oil ministers Saturday discussed "the many factors" that have driven crude oil prices higher in recent weeks.
Some in OPEC are angry that Riyadh has decided to lift its production to just over nine million barrels daily in June, a rise of about 10 percent, without OPEC approval.
"They can't. It's a mistake. Saudi Arabia can't decide alone to increase production," Libya's Oil Minister Fethi bin Chetwane told reporters.
On Friday, Venezuela's oil minister Rafael Ramirez said his country opposes any increase in OPEC oil supply, saying it would not help alleviate the recent spike in oil prices.
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