Saudi ups oil output to curb prices

Saudi Arabia, the world's largest oil exporter, is to raise production from 9.5 million barrels a day to 11 million barrels in an attempt to rein in prices that have topped $50 a barrel.

    Saudi Arabia is the world's largest oil producer

    The increase will go into effect within weeks, according to a senior oil ministry official

     

    who spoke on condition of anonymity.

    No further details were

    provided.

    Opec had said producers were seeking ways to calm markets after

    the cartel's announcement that it would boost production by one million barrels a

    day beginning in November failed to bring down prices.

    It was not immediately

    clear if all or some of that oil was included in the 1.5 million barrel

    increase the official described on

    Tuesday.

    Saudi Oil Minister Ali Niaimi said last month his country was willing

    to provide an extra 1.3 million barrels of oil a day to the world market if

    required to do so.

    Record prices

    Yet, there has been some concern about whether Saudi

    Arabia has the excess capacity to significantly boost production.

    Word of the decision came as crude oil topped $50 per barrel during

    Asian trading on Tuesday, pushing past the psychological milestone for the

    first time.

    High oil prices are hurting the
    West's economies

    Traders bid oil to new highs in after-hours trading on the New York

    Mercantile Exchange in a reaction to the slow recovery of US oil production.

    The recovery has been slowed

    by Hurricane Ivan and political unrest

    in key

    producers Saudi Arabia, Iraq and Nigeria.

    The price of oil is 75% higher than a year ago and some analysts are

    predicting the latest surge - which is already hurting airlines and

    other big consumers - could lead to a global recession.

    Nigeria oil threat

    Meanwhile, multinational energy companies have said o

    il should continue to flow from

    Nigeria despite a rebel threat to attack foreign oil workers.

    The rebel Niger Delta People's Volunteer Force, fighting for

    autonomy of the oil-producing southern delta, issued a

    communique on Monday telling oil companies to shut

    production and withdraw their staff before an "all-out war on

    the Nigerian state" due to start on Friday.

    Nigerian rebels want to seize
    control of a southern oil region

    The communique singled out Royal Dutch Shell Group and

    Italy's Agip for what it said was collaboration "in acts of

    genocide against our people", according to rebel leader Mujahid Dokubo-Asari

    .

    Shell, the largest oil producer in the Opec member nation,

    and Agip have both denied helping the military, which fired on

    rebel positions earlier this month using helicopter gunships.

    Shell said it had already evacuated 235 staff from two

    oilfields to address specific threats of violence.

    A small

    volume of oil production has been lost due to heightened

    security restrictions, an industry source said.

    Fighting

    Shell confirmed on Tuesday it had already cut oil

    output by about 30,000 bpd at the Santa Barbara flow station

    due to security restrictions in the delta.

    A source close to

    Agip's parent Eni said the company had no plans to stop its

    Nigerian oil output.

    "We have received threats like this in the past. We have

    made a precautionary withdrawal from areas where we see a

    security risk"

    Shell spokesman

    "We have received threats like this in the past. We have

    made a precautionary withdrawal from areas where we see a

    security risk," the Shell spokesman said.

    "We are watching developments, but for now we see no reason

    not to continue our operations."

    Until now, fighting has been focused on the eastern delta

    around Port Harcourt, particularly Asari's native Kalabariland

    southwest of the city.

    Nigerian oil is produced by five multinational oil

    companies: Shell, ExxonMobil, Total, ChevronTexaco and Agip.

    The country is the fifth largest supplier to the United States.

    SOURCE: Agencies


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