Reports circulated through oil industry and diplomatic circles yesterday that Saudi Arabia and perhaps other key petroleum producers plan to raise output temporarily to compensate for a shortfall caused by the war between Iraq and Iran.
If such a production increase were implemented, it would counter pressure for a rise in oil prices by members of the Organization of Petroleum Exporting Countries. The 11-day-old Persian Gulf war already has contributed to a jump of $4 or $5 -- to between $34 and $37 a barrel -- on the sensitive world spot oil market and there was speculation at some OPEC members might be tempted to follow the trend for their long-term prices.
A normally reliable oil industry newsletter, Petroleum Intelligence Weekly, reported that Saudi production will go up by 900,000 barrels a day to 10.4 million. A similiar report, based on Japanese oil industry sources, was circulated in Tokyo by Japan's public broadcasting corporation, NHK, estimating the increase at 700,000 barrels a day.
The official Saudi news agency denied the reports, however, and State Department sources said in Washington that they had no official indication that the Saudis intend to raise production.
Saudi Arabia, the world's largest oil exporter and the source of 20 percent of U.S. oil imports, has been pumping approximately 1 million barrels a day above its normal ceiling of 8.5 million barrels at U.S. request to ensure adequate supplies and relieve pressure for higher prices.The general expectation before hostilities broke ou t between Iran and Iraq, however, was that the kingdom and other OPEC members planned to lower production soon because of ample supplies on the world market.
Since then, the gulf war has resulted in a drop in oil exports estimated by industry experts at about 3.7 million barrels a day and Kuwait and the United Arab Emirates have made known their intention to keep up present pumping levels to help make up the difference.Sources at the International Energy Agency in Paris said Venezuela and Saudi Arabia had given some indications they also are willing to keep up present levels and, despite the official denial by Saudi Arabia, perhaps even increase them if needed to fight pressure for higher prices.