Saudis make vague offer of more oil

Facing strong U.S. pressure and global dismay over oil prices, Saudi Arabia said Sunday that it would produce more crude this year if the market needed it.

The vague pledge fell far short of U.S. hopes for a specific increase and may do little to lower prices immediately.

For now, the current “oil shock” leaves Western countries with little choice but to move toward nuclear power and change their energy-consumption habits, British Prime Minister Gordon Brown warned at a rare meeting of oil-producing and consuming nations.

Saudi Arabia -- the world’s top crude exporter -- called the gathering Sunday 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 such as Saudi Arabia and consuming countries such as Britain and the United States over the core factors driving steep price hikes. Oil closed near $135 a barrel Friday -- almost double the price a year ago.

The cost of gasoline also has become a sore point in the U.S. presidential race, with President Bush and presumed Republican nominee John McCain calling on Congress to lift its long-standing 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 short-term.

The U.S. and other nations argue that oil production has not kept up with increasing demand, especially from China, India and the Middle East. But Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation and the falling U.S. dollar.

Saudi Oil Minister Ali Ibrahim Naimi said the kingdom was willing to produce more than the 9.7 million barrels of oil a day it had already planned to produce in July -- if the market required it.

But he also blamed speculators and asserted supply was 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.

Saudi Arabia’s King Abdullah also said his country was 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.

U.S. Energy Secretary Samuel Bodman, however, said earlier that U.S. officials had found no evidence speculators were driving up prices.

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

Both announcements had already been factored into oil prices before Sunday’s meeting -- and neither did much to stem their rise. Total worldwide crude production is about 85 million barrels a day.

The Saudi output increase is “going to help a little bit, maybe reduce prices just a little,” New Mexico Gov. Bill Richardson, a Democrat and former President Clinton’s energy secretary, said on CNN’s “Late Edition” program. “It won’t be significant.”

It was unclear whether Sunday’s announcements would have any greater effect.

At least one analyst said he thought they would spur prices only higher.

The oil market has been in a holding pattern to see whether Saudi Arabia would take more aggressive steps toward boosting output, said Stephen Schork, an oil market analyst and trader in Villanova, Pa. The market’s likely to view the announcement as a sign Saudi Arabia will not, he said.

“We don’t know anything more today” than what was known Friday, said Schork, who predicted “$150 [a barrel], here we come.”

Bush has visited Saudi Arabia twice this year to push for increased oil production but has little to show for the effort.

To address long-term concerns about supply, Naimi said Saudi Arabia was willing to invest to boost its spare oil production capacity above the current 12.5 million barrels a day planned for the end of 2009 -- again, if the market required it.

That reversed previous indications the country would not go beyond that figure.