Saudi Arabia May Push For Increase in OPEC Output

Saudi Arabia may push for a 1.8% increase in output by the Organization of Petroleum Exporting Countries as early as this week if oil prices continue to drive toward $100 a barrel, an official familiar with the situation said Monday. The Saudis want another 500,000 barrels a day in the market. They don't like these prices for consumers," an official close to the group's policy discussions said, a day after Saudi Arabia's Oil Minister Ali Naimi indicated the 12-member oil cartel, which meets more than 40% of the world's needs, may discuss a production increase.

Leaders from the world's top oil producers will meet this weekend in Saudi Arabia's capital, Riyadh, to discuss the challenges a potential global recession and an anemic dollar present to their estimated $1.8 billion a day in revenue. They will discuss a raft of challenges to their core business, including soaring costs to projects and heightened environmental concerns that are spurring a push toward alternative energies. They are also expected to talk about what, if anything, they can do to prevent record oil prices from destabilizing the global economy.

Senior officials within the Saudi Arabian delegation have made it clear they don't feel comfortable with current oil prices, which have almost doubled from a low of $49.90 a barrel in January to a record $98.62 a barrel for U.S., light, sweet crude last week, and that something must be done. (See related article.)

In Kuwait on Sunday, Mr. Naimi, OPEC's de facto leader, said it is "premature" to speak of a production increase, but "when OPEC meets, we will discuss this issue." It was unclear whether he was referring to this week's summit or formal OPEC policy talks by oil ministers due Dec. 5 in Abu Dhabi.

One sticking point will be the timing of such a move. The official said the timing would hinge on talks with other OPEC oil ministers, who will meet Thursday or Friday in a closed session ahead of the summit of heads of state in Riyadh at the weekend. "If the market progresses [and rises above] $100 a barrel, I think the Saudis will push for something then and not wait until the December meeting," the official said.

But a source familiar with OPEC thinking said insiders "really don't want this summit to turn into an OPEC policy meeting" and senior officials "are not getting any indication that they'll do anything" this week. The source added it was possible that oil ministers might agree to something late this week.