Saudi ups oil output to curb prices

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 oil 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.