Saudi Policy Remains Unchanged After OPEC Decision

By Ayesha Daya

Sept. 10 (Bloomberg) -- Saudi Arabia isn't planning to reduce its oil production even as OPEC urged members to lower output and return to their official targets, a Saudi oil official said today.

There is no change in its oil policy and Saudi Arabia will supply whatever customers demand, an official from the world's biggest oil producer said today, speaking on condition of anonymity.

The Organization of Petroleum Exporting Countries, whose members supply more than 40 percent of the world's oil, urged members to adhere more strictly to production quotas after prices for Brent crude fell below $100 a barrel yesterday for the first time in five months.

Iran, Venezuela and Libya were among members that pressured OPEC to take action to support prices that have fallen more than 30 percent from July's record as slower global economic growth curbs demand.

OPEC agreed at a meeting in Vienna to a total production limit for 11 members of 28.8 million barrels a day, some 500,000 barrels a day lower than the group's actual July production. The target excludes Indonesia which has suspended its membership of the organization, and Iraq.

Most of the excess oil has come from Saudi Arabia, which raised output by 500,000 barrels a day in June and July to calm prices that doubled from a year earlier to reach a record $147.27 a barrel on July 11. It hosted an emergency meeting of global oil producers and consumers in Jeddah in June to discuss how to stabilize markets.

Under Producers

``Saudi Arabia may not have to bear the brunt of the production cut,'' said OPEC research head Hasan Qabazard after the OPEC meeting. ``There are countries that are under-producing, such as Nigeria, so the Saudis can take part of their quota.''

Crude oil in New York traded at $104 a barrel, up 74 cents, or 0.7 percent, on the New York Mercantile Exchange at 12:57 p.m. London time. It earlier rose as much as $1.56, or 1.5 percent, to $104.82 a barrel.

``The market is in a very healthy position,'' Saudi Arabian Oil Minister Ali al-Naimi said before the closed- door meeting began yesterday at OPEC's headquarters. ``Demand for Saudi crude is very healthy.''

To contact the reporter on this story: Ayesha Daya in Vienna at adaya1@bloomberg.net.