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Saudis offer to hike oil output

Prices near record high levels

By CNN State Department Correspondent Andrea Koppel

Oil continues to trade near record levels.
Organization of Petroleum Exporting Countries (OPEC)
Oil and Gas
Saudi Arabia

WASHINGTON (CNN) -- Making good on a pledge made in May, Saudi Arabia announced Wednesday it is prepared to increase oil output by up to 1.3 million barrels per day -- 14 percent -- to cope with world demand.

"We believe the price of crude oil at current levels is way too high and should come down to more reasonable levels," Adel al-Jubair, foreign affairs advisor to Saudi Crown Prince Abdullah, told journalists in a telephone conference call.

He called it "pure fiction" to claim that the increase was due to a private deal with the White House -- timed to get the price of crude oil down in time for the November election -- as journalist Bob Woodward wrote in a recent book.

In addition, al-Jubair said the Saudi government is prepared to keep oil production at this level "indefinitely."

At the same time, he noted that the Saudis are not seeing a noticeable up tick in demand despite the steady increase in oil prices around the world. Factors affecting the rising prices include concerns about Iraq, coming elections in Venezuela and the controversy surrounding Yukos oil in Russia, he said.

For the last several months Saudi Arabia, which has the world's largest petroleum reserves, has been producing more than 9.3 million barrels a day, an increase from previous production levels of 8.5 million barrels a day, the Saudis said.

Al-Jubair said the Saudis had informed all of their customers within the last week of the kingdom's intention to make additional crude oil available to the international market.

In May the Saudis made clear they were prepared to increase oil production beyond the Saudi OPEC responsibilities, if necessary.

Washington Post reporter Woodward, whose "Plan of Attack" was released earlier this year, wrote that Saudi Arabia's ambassador to the United States, Prince Bandar bin Sultan, promised President Bush that the Saudis would cut oil prices before November to ensure a strengthening U.S. economy.

Sultan and the Bush administration denied the allegation at the time, as al-Jubair did Wednesday.

High oil prices, he said, are not good for the bottom line for oil producing nations because they lead to economic slowdowns and a decrease in demand.

And, he added, that would be the Saudi policy "regardless of who is in the White House."

The cost of oil, recently at $45 per barrel, has dipped below $44.

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