Saudis vow go-slow approach on increasing oil production

LONDON -- Saudi Arabia plans to press for a gradual rise in oil production during the March 27 meeting of OPEC oil ministers.

Fresh from an agreement with Iran, Saudi leaders do not intend to advocate an immediate or dramatic increase in oil production. They said such a move could plunge oil prices and wipe out the gains of the year-long price rise that resulted from a production cut.

"Just as a sudden fall in prices is not in the interest of consumers, so a sudden increase is not in the interest of producers," Saudi Crown Prince Abdullah Bin Abdul Aziz said. "Any shift in the supply-demand balance will not be in the interest of either the producers or consumers."

In an interview with the Saudi news agency on Thursday, Abdullah termed the crude oil market as being marked by imbalance. But he stressed that Riyad will not confront opponents of an oil output increase.

Instead, he called for coordination and consultation to ensure OPEC unity. "We will work, through coordinated action, just as we did in the past, to restore stability to the market in a way that safeguards the interests of exporting countries, and does not harm the global economy," he said.

On Wednesday, Iran and Saudi Arabia agreed to a gradual increase in oil production. Analysts said OPEC is likely to agree to a one million barrel per day increase, about half of what the United States has requested.

One compromise, the analysts said, would be an oil output increase of one million barrels per day starting from April 1, with future increases set to market conditions. The onset of summer is expected to lead to a drop in consumption and prices.