Saudi Arabia: Market Dictates Production

RIYADH, Saudi Arabia (AP) -- Saudi Arabia will raise oil production only when the market justifies it, the kingdom's oil minister said Tuesday, in response to President Bush's request that OPEC nations increase output to reduce world oil prices.

"Our interest is to keep oil supplies matching demand with minimum volatility in the oil market," Oil Minister Ali Naimi told reporters. "We will raise production when the market justifies it. This is our policy."

Naimi said inventory levels appear to be "normal," adding, "we want the inventories to be healthful, but we don't want it to be extremely high or extremely low."

Earlier Tuesday in Riyadh, Bush warned that soaring oil prices could cause an economic slowdown in the United States.

"High energy prices can damage consuming economies," the president told a small group of reporters traveling with him in the Mideast.

Saudi Arabia holds the world's largest supply of oil. Bush said U.S. consumers are feeling the pain of rising oil prices, which topped $100 a barrel this month.

"When consumers have less purchasing power, it could cause the economy to slow down," Bush said. "I hope OPEC nations put more supply on the market," he added. "It would be helpful."

The Organization of Petroleum Exporting Countries next meets Feb. 1 in Vienna, Austria, to consider increasing output. OPEC oil accounts for about 40 percent of the world's needs, and OPEC ministers often follow the lead of the Saudis when discussing whether to increase production to take the pressure off rising prices. The Saudis' views carry great weight because of its large share of output.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

RIYADH, Saudi Arabia (AP) - Saudi Arabia will raise oil production only when the market justifies it, the kingdom's oil minister said Tuesday, in response to President Bush's request that OPEC nations increase output to reduce world oil prices.

"Our interest is to keep oil supplies matching demand with minimum volatility in the oil market," Oil Minister Ali Naimi Naimi told reporters. "We will raise production when the market justifies it. This is our policy."

Naimi said inventory levels appear to be "normal," adding, "we want the inventories to be healthful, but we don't want it to be extremely high or extremely low."

Earlier Tuesday in Riyadh, Bush warned that soaring oil prices could cause an economic slowdown in the United States.

"High energy prices can damage consuming economies," the president told a small group of reporters traveling with him in the Mideast.

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