Saudis to pump more oil

RIYADH, Saudi Arabia – Saudi Arabia sought to soothe oil markets Wednesday by saying it could immediately pump an extra 1.3 million barrels of oil a day, an increase of 1.5 percent in global output.

Saudi Oil Minister Ali Naimi said the world’s largest producer was “prepared to meet all the requirements of the international oil companies if they need additional volumes, relying on the surplus production capacity of more than 1.3 million barrels daily, which could be used immediately if required,” the official Saudi Press Agency reported.

But traders predicted the comments would not be enough to halt the run up in oil prices. Crude futures hit a record $44.84 a barrel on the New York Mercantile Exchange on Monday.

“If they were hoping to break the back of the rally with just that, it’s not going to come to fruition,” said John Kilduff, senior vice president of the energy risk management group at Fimat USA Inc. “There are just too many uncertainties regarding supply.”

Kilduff said oil markets want to see “concrete” evidence that extra supplies are being put onto the market.

Oil prices have been soaring due to fears of terrorism, disruptions to Iraqi crude exports and financial troubles at Russia’s largest oil producer, Yukos, which is in a battle with the government over billions in back taxes.

The world oil market is trying to come to grips with rising demand, tight supplies and soaring prices.

By midday Wednesday, prices were down 12 cents at $44.40 in Nymex trading.

The Saudi oil minister said the country had recently increased production by 1 million barrels a day, “bringing the average production of the kingdom during the past three months to more than 9.3 million barrels daily.”

“The Kingdom of Saudi Arabia, along with other OPEC countries, endeavors to ensure the stability of the international oil market and prevent oil prices from escalating in a way that may negatively affect the world economy or oil demand,” he added.