JEDDAH, 30 August 2005 — Saudi Arabia yesterday announced its readiness to increase crude oil production to 11 million bpd if world market faces any shortage  

JEDDAH, 30 August 2005 — Saudi Arabia yesterday announced its readiness to increase crude oil production to 11 million bpd if world market faces any shortage in oil supplies as a result of Hurricane Katrina.

"We are closely monitoring the impact of Hurricane Katrina on US crude oil supplies, refining activity and oil prices," said Minister of Petroleum and Mineral Resources Ali Al-Naimi.

"We continue to be in close contact with our customers, especially those in the US, to assist them during any shortfall in oil supplies," the Saudi Press Agency quoted the minister as saying.

He said the Kingdom was ready to increase its crude oil output immediately to 11 million barrels per day and sustain that level to offset any shortages in the market.

"Upstream expansion plans to increase production capacity to 12.5 million bpd are well underway to ensure Saudi Arabia's continued commitment to maintaining adequate global crude oil supplies," he stated.

Oil prices surged to a record above $70 a barrel yesterday as one of the biggest hurricanes in US history disrupted oil and gas production in the Gulf of Mexico. The region is home to a quarter of total US oil and gas production.

US crude oil futures jumped nearly $5 a barrel in electronic trade to touch a peak of $70.80 a barrel, the highest front-month price since the New York Mercantile Exchange (NYMEX) began trading the contracts in 1983.

Oil traded up $2.37 a barrel at $68.55 at 1447 GMT, trimming early gains after Hurricane Katrina slammed into Louisiana and Mississippi as a powerful Category 4 storm on the five-step Saffir-Simpson scale.

Al-Naimi also expressed his concern over the growing oil prices and their possible impact on the world economy, particularly on the economies of developing countries.

"World oil markets are currently well balanced and there is adequate supply of crude oil," the Saudi oil minister said citing "ample levels of crude oil stocks in OECD countries." Al-Naimi also pointed out that crude stocks in the US were almost 40 million barrels higher than last year at this time.