AMSTERDAM, Netherlands – The U.S. energy secretary said that Saudi Arabia (search) has assured Washington it will supply up to 2 million barrels a day in additional crude oil if the market demands it.
The pledge underscored differences within the Organization of Petroleum Exporting Countries (search), which has come under intense pressure from the United States and other oil-importing countries to boost output to calm markets and reduce prices. Saudi Arabia is OPEC's most influential member, and it alone has significant unused capacity to pump more oil quickly.
Some OPEC members say there is enough oil on the market already, and argue that the high prices are a result of the war in Iraq and instability in the Gulf.
Energy Secretary Spencer Abraham (search) told reporters Sunday that Saudi Arabia has pledged to pump an additional 600,000 barrels a day starting in June, lifting its daily output to 9.1 million barrels.
"He also stated that going forward they will meet all requests up to their full capacity of 10.5 million barrels a day. I think this was a very important comment on his part," Abraham said after meeting privately with Saudi Oil Minister Ali Naimi (search).
He said he expected the new Saudi commitment would help reassure oil markets about the reliability of supplies.
Oil prices have soared above $40 a barrel in recent weeks due to fears about instability in Iraq, bottlenecks in gasoline production at U.S. refineries, and an unforeseen burst in global demand, particularly from China and the United States.
Any fresh Saudi crude would take several weeks to reach U.S. ports, and American motorists are unlikely to benefit right away from lower pump prices for gasoline.
Abraham met with Naimi during a three-day conference of energy producing and consuming nations.
The Saudi Oil Ministry proposed Friday that OPEC increase its production ceiling by 2 million barrels a day, or 8.5 percent. At the same time, it pledged to raise its own output to at least 9 million barrels in June.
Although OPEC expressed concern about the sharp rise in oil prices, it announced Saturday it was deferring a decision about increasing its ceiling until it meets June 3 in Beirut.
Naimi's assurances to Abraham were the most explicit Saudi commitment to produce at this higher level since oil prices reached the psychologically important threshold of $40.
They also represent a dramatic shift in Saudi policy: OPEC members, led by Saudi Arabia, agreed as recently as March to cut production by 1 million barrels a day in anticipation of a lull in seasonal demand.
Demand picked up instead, to OPEC's surprise. U.S. gasoline prices hit new highs as motorists prepared for the peak summer driving season, and OPEC has borne the brunt of demands for more oil.
Adnan Shihab-Eldin, director of OPEC's research division, suggested that faulty data about the size of global oil stocks, or inventories, and the supply and demand for crude were partly to blame for the group's misjudgment.
"Supply and demand were pointing in one direction. Stock levels were pointing in another direction," he told reporters.
Iranian Oil Minister Bijan Namdar Zangeneh acknowledged Saudi Arabia's right to take independent action to pump more oil if it thinks it's necessary. However, he appeared displeased. Iran is also a member of OPEC, and Zangeneh emphasized that it is important for OPEC to reach consensus as a group on oil production levels.
Although Zangeneh said he believed there was already enough oil on the market, he agreed that crude prices were too high and suggested that he might support an increase in the OPEC ceiling.
"For the short term, it probably is necessary to send a positive signal to the market," he told a news conference.
Speaking earlier, Venezuela's Oil Minister Rafael Ramirez blamed U.S. policy in Iraq for causing high crude prices by destabilizing the Middle East. He argued that an increase in oil production would do nothing to help push prices lower.
Ramirez insisted that global supplies of crude are plentiful and criticized U.S. actions in Iraq for increasing tensions in the oil-rich Middle East.
"There is no question that the current U.S. policy is to blame for the current high prices of oil," Ramirez told a news conference.
His defiant comments could complicate Saudi Arabia's efforts to unite the group behind its proposal for OPEC to raise its output ceiling. Ramirez argued that instead of boosting crude output, OPEC should accept a Venezuelan proposal to raise the group's target price for crude. The current target price range is $22 to $28 a barrel for OPEC's benchmark blend of crudes.
The differences between Saudi Arabia and Venezuela over OPEC policy are playing out against the backdrop of the U.S. presidential campaign.
Saudi Arabia has close ties with President Bush, whose re-election prospects have suffered due to high gasoline prices. Venezuelan President Hugo Chavez has accused the Bush administration of supporting efforts to topple his leftist government.