Saudi oil minister offers to boost production

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The oil market has been in a holding pattern to see if Saudi Arabia would take more aggressive steps toward boosting output, said Stephen Schork, an oil market analyst and trader in Villanova, Pa. The market’s likely to view the announcement as a sign it will not, he said.

“We don’t know anything more today that we didn’t know Friday,” said Schork, who predicted “$150 (a barrel) here we come.”

Linda Rafield, senior oil analyst at energy trade publication Platts, said she expected the reaction to be less dramatic.

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“I don’t see prices going into freefall at the start of trading (Sunday) evening, but I don’t see the bulls being given any reason to bid prices back up to the $140 level,” she said.

Raad Alkadiri, an oil market expert at U.S.-based PFC Energy, said the Saudi announcement would help ease the fears of some who doubt the kingdom’s ability to produce additional oil, both now and in the future.

But others will continue to worry that Saudi production is hitting its limits, he said. Still others worry Saudi Arabia will continue to say market demand doesn’t justify an increase.

Bush has visited Saudi Arabia twice this year to push the country’s king to increase oil production but has little to show for the effort.

To address long-term concerns about supply, al-Naimi said Saudi Arabia also is willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009 — again, if the market requires it.

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That reversed previous indications the country would not go beyond that figure.

British Prime Minister Gordon Brown echoed U.S. officials’ calls for commitments of specific production increases. Such actions would help ensure that “instead of uncertainty and unpredictability, there is greater certainty, and instead of instability, there is greater stability,” he said.

But he and Bodman also urged consuming countries to increase energy efficiency and invest in alternative sources of fuel. Brown said the high prices — what he termed an “oil shock” — leave industrialized countries with few choices but turning more to nuclear power and lowering energy consumption.