Saudi Arabia to raise oil output

Oil price futures fell on Tuesday after Saudi Arabia pledged to increase crude oil production from 9,5 to 12.5 mln barrels per day within three years, and to 15 mln barrels per day over the long term, after a meeting between Saudi and US leaders on Monday.

June prices for light, sweet crude dropped 72 cents to USD 53.85 a barrel overnight in Asia, according to CNN.

US President George Bush Met Saudi Crown Prince Abdullah at Bush’s ranch in Texas.

Spokesman for the Crown Prince Adel al-Juebeir warned however that petrol prices would not fall unless the US also raised refining capacity.

“It will not make a difference if Saudi Arabia ships an extra million or 2 million barrels of crude oil to the United States if you cannot refine it,” he said. “It will not turn into gasoline, and that will not turn into lower prices.”

Saudi Arabia is the US’s biggest supplier of crude oil. The US is pushing for Saudia Arabia to join the World Trade Organisation before the end of 2005.

Signs that US refineries are responding to such calls came on Monday, when the US’s third biggest reinder, Valero Energy Corp., decided to buy Premcor Inc at a price of USD 3.4 bln in cash and USD 3.5 bln in stock.

The deal will make Valero the biggest refiner in the US, ahead of both Exxon Mobil and ConocoPhillips.

The deal is still subject to approval by the Federal Trade Commission, the body which protects competition in the US market.