UPDATE 2-Saudi says mission accomplished in reducing oil prices

* Saudi says "achieved feat" of restoring oil marketstability

* Says oil prices now suitable for global economic growth * Higher Saudi output compensated for cut in Iran supplies By Reem Shamseddine and Angus McDowall

RIYADH, Oct 9 (Reuters) - Saudi Arabia is satisfied that oilprices have fallen to a level that does not hamper globalgrowth, Saudi Oil Minister Ali al-Naimi said on Wednesday,signalling success in a Gulf Arab effort to keep oil pricesunder control despite a halving of Iranian exports because ofWestern sanctions.

"Our countries have exerted major efforts to restore globaloil market stability, a feat that has actually been achieved,"Saudi Oil Minister Naimi told a meeting of Gulf Arab energyministers in Riyadh.

"Stability has been restored and oil prices returned tolevels which are suitable to both the consuming and producingnations and to the global economy and its growth," Naimi said.

OPEC's biggest oil producer, Saudi Arabia raised output to a30-year high of 10 million barrels a day earlier, helpingcompensate for a cut in exports from Iran, a fellow member ofthe Organization of the Petroleum Exporting Countries. Riyadhwas supported by Gulf allies Kuwait and the United ArabEmirates.

Sanctions against Iran's nuclear programme had threatened tosend oil prices rocketing. That would have further impeded slowWestern economic growth and diluted the impact on Iran's oilrevenues of the U.S. and European Union measures.

But the extra volumes from Riyadh have helped compensate fora halving of Iranian exports and reversed a spike in prices thattook Brent crude to $128 a barrel in March. Brent traded near$112 a barrel on Tuesday.

"We continued our policy of allaying market fears, providingsupplies when needed and limiting high price fluctuations duringthe ensuing months till this present day," said Naimi. He madeno mention of Iran in the speech to energy ministers of the GulfCooperation Council.

Asked by reporters if the aim was to reduce prices to $100 abarrel, Naimi added: "We hope the price will moderate and wewill work towards moderating the price."

That would suggest that Riyadh may want to see prices fallfurther. Naimi identified $100 a barrel as a suitable priceduring a visit to Japan, a major buyer of Saudi crude, earlierin the year.

(editing by Daniel Fineren, Richard Mably)

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