Saudi Arabia to increase oil production by half-million barrels

Concerned that skyrocketing oil prices might induce a world-wide economic slump, Saudi Arabia is planning to increase oil production next month by about a half-million barrels a day, The New York Times reported on its website late Friday.
Citing unnamed analysts and oil traders who have been briefed by Saudi officials, the newspaper said the increase could bring Saudi output to a production level of 10 million barrels a day. The move is seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices, the report said.
While they are reaping record profits, the Saudis are concerned that today's record prices might eventually dampen economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries, according to The Times.
The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy, the paper said. Saudi Arabia is currently pumping 9.45 million barrels a day, which is an increase of about 300,000 barrels from last month.
Crude oil prices slipped Friday on a firming dollar and signs of slowing demand ahead of an exceptional international oil summit in Saudi Arabia next weekend. New York's main oil futures contract, light sweet crude for July delivery, shed 1.88 dollars to close at 134.86 dollars a barrel.
The Organisation of Petroleum Exporting Countries on Friday cut its 2008 estimate of growth in world oil demand, as high prices and slower economic growth brake demand in major industrialised countries, the United States in particular.
Global oil demand was now projected to rise by 1.28 percent in 2008, the Organisation of the Petroleum Exporting Countries said in its June monthly report, lowering its prior estimate of 1.35 percent. In Japan, finance ministers from the Group of Eight industrialised powers discussed runaway crude oil prices and a global food crisis.
At a two-day meeting in Osaka that ends Saturday, the G8 ministers will warn that high oil and food prices pose serious risks to global economic growth, said a G8 source, who requested anonymity.