Saudi ministry says higher oil output driven by demand

Saudi Arabian Oil Minister Ali al-Naimi
Heinz-Peter Bader | Reuters

Saudi Arabia's oil ministry said on Tuesday the rise in its oil production over the past three months was a result of increased global demand and the needs of its customers, and was not designed to compensate for lower oil prices.

The world's biggest oil exporter has ramped up production to around 10.3 million barrels per day (bpd) - its highest rate on record.

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That level was first reached in March, and eclipsed its previous peak of 10.2 million bpd in August 2013, according to records going back to the early 1980s.

The Saudi oil minister said in April the country's output would likely remain at around 10 million bpd.

The oil ministry, in a rare statement, said the kingdom's oil policy did not reflect personal views and was formulated by an integrated team of experts and specialists in oil market economics, based at the ministry's offices in Riyadh.

"It is done in coordination with oil-producing countries, especially OPEC countries, so as to serve the Kingdom's interests in the short and medium terms. It is also reviewed by the country's senior leadership. The integrated team of experts and advisers supports the decision makers," the official said.

The ministry said the statement was issued after the Wall Street Journal published a story last week about the kingdom's oil policies, which it said it considered to be inaccurate.

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A former climate change and environmental issues adviser to the oil ministry, Mohammad al-Sabban, was among the names mentioned in the article, in which he gave his views on Saudi oil policy.

"The current Saudi policy is trying to protect its market share in the wake of increasing production of conventional and shale oil outside the cartel," Sabban told the Wall Street Journal. "Saudi Arabia and OPEC are trying to minimize the loss in oil revenues by increasing production," he said.

The oil ministry statement said Sabban "was not on the specialized economic team assigned to study global oil market conditions and the Kingdom's foreign petroleum policy".

It said his term had ended in mid-2013 and that "the statements he makes to Arab and international media, and his journalistic writings, represent only his personal point of view and do not ... reflect the Kingdom's official position on petroleum issues".

On Friday, oil group OPEC agreed to stick by its policy of unconstrained output for another six months, setting aside warnings of a second lurch lower in prices as some members such as Iran look to ramp up exports.