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. Last Updated: 07/27/2016

Saudis Favor Big Boost In Crude Oil Output




DUBAI, United Arab Emirates -- OPEC heavyweight Saudi Arabia on Wednesday threw its weight behind an output hike from April 1 to meet expected refiner demand for "lots" more oil.


A Saudi source familiar with the policy of the world's largest oil producer said the exact amount of the increase would be decided when ministers from the Organization of Petroleum Exporting Countries meet March 27 in Vienna, Austria.


"The trend right now is for OPEC and non-OPEC producers to increase production from the beginning of the second quarter by an amount reflecting expected demand," the Saudi source said.


The comments marked the first time that a Saudi source has publicly said the kingdom favors a large increase from April 1.


The source said the market "needs more oil and lots of it" as refiners are desperate for extra barrels to replenish low inventories and to increase runs to meet demand for gasoline in the third quarter and heating fuel in the fourth quarter.


"We have a responsibility as oil producers to satisfy this market and we should not hesitate. Our commitment to supply the world economy with adequate supplies is beyond doubt," he said.


Producers have come under considerable pressure from the United States, the world's largest oil consumer, to increase output to replenish dwindling fuel stockpiles and take the heat out of a rally that has sent crude to nine-year highs.


Oil markets have taken a volatile ride on often contradictory statements from various oil ministers.


U.S. retail gasoline prices hit a record high in March and the crude price has become a U.S. presidential election issue after trebling since late 1998 due to output cuts masterminded by OPEC's Saudi Arabia, Venezuela and non-OPEC Mexico.


That trio now sees the need for a supply increase as soon as possible while Iran, OPEC's second largest producer, had been a vocal opponent of an immediate hike.


On Monday, Iran's OPEC governor Hossein Kazempour Ardebili said his country favored releasing only small amounts of extra supplies over limited periods to avoid a sharp price fall.