Oil Production Outlook Boosts the Dollar

Word that Saudi Arabia intends to raise its oil production, which probably would lower oil prices, gave the dollar a strong boost against most other major currencies Thursday.

European dealers said that the British pound fell sharply in response to a statement Wednesday by Saudi Oil Minister Sheik Ahmed Zaki Yamani that Saudi Arabia planned to nearly double its oil production.

In addition, Venezuela, like Saudi Arabia a member of the Organization of Petroleum Exporting Countries, announced an average $1.95 per barrel cut in its heavy crude oils on Thursday.

The resulting fall in oil prices would reduce the substantial revenues that Britain gets from its North Sea oil fields.

Until recently, the pound “totally ignored all the oil news,” said Robert Ryan, chief trader at Irving Trust Co.,

Gold prices also declined. In New York, Republic National Bank quoted gold as of 4 p.m. EDT at $320.40 an ounce, off $6.10 from Wednesday’s late bid.