Saudis: We'll Pump More, But You Help

Saudi Arabia is willing to produce more oil if customers need it, the kingdom's oil minister said Sunday without citing any specific output increase.

Saudi Arabia, the world's largest oil exporter, has been under intense pressure from the U.S. and other oil consumers to increase its crude output to help slow the soaring price of oil.

But, any hopes that today's summit in Saudi Arabia would put the brakes on runaway oil prices were dashed when the Saudis announced an immediate increase of only two hundred thousand more barrels of oil a day, with a vague promise of more down the road when demand warranted, CBS News Correspondent Priya David reports.

The kingdom already announced modest increases and said it would pump 9.7 million barrels a day beginning in July. But those increases have not done much to stem the skyrocketing price of oil, which closed near $135 a barrel on Friday.

"The Saudi government has confirmed its commitment to increase oil production without waiting for OPEC," said CBS News Foreign Affairs Analyst Pamela Falk, who was in Jiddah with the U.N. Secretary General earlier this week, "but it has been clear from all the statements by the Saudi government coming out of the summit, that they expect the U.S. to play its part, by dealing with speculators, and the other oil producing countries to follow their lead, to the extent that they can."

"The Jiddah summit was designed to put the Saudi government at the helm in terms of trying to relieve the pressure of high oil prices," said Falk, "with the Saudi view, stated explicitly at the meeting, that they are not solely to blame."

The high prices are affecting consumers and economies across the United States, Europe and much of the world. Many countries have experienced social unrest as rising fuel prices have driven significant increases in the cost of food and other basic goods.

The cost of gasoline has also become a sore point in the U.S. presidential race, with President Bush and Republican candidate John McCain calling for lifting of a long-standing ban on offshore oil and gas drilling to increase domestic oil production. But Democratic candidate Barack Obama has said such steps will do nothing in the short term to ease American consumer's pain.

It was unclear if Oil Minister Ali al-Naimi's remarks Sunday at a high-level oil summit in the port city of Jiddah would quell concerns.

Al-Naimi, who was expected to formally make the announcements in a speech later Sunday, reiterated his government's position that the recent run-up in prices has not been caused by a supply shortage. But he said he also believes each country must do what it can "to alleviate these difficult conditions."

For the remainder of the year "Saudi Arabia is willing to produce additional barrels of crude oil above and beyond the 9.7 million barrels per day which we plan to produce during the month of July, if demand for such quantities materializes and our customers tell us they are needed," al-Naimi said in the speech, a copy of which was obtained by The Associated Press in advance.

The conference's final statement restated the participants' concern over volatile oil prices, but attempted to strike a balance over the cause. Producers, like Saudi Arabia say it is due to speculation, while the United States maintains it is due to insufficient supply.

"Spare capacity throughout the oil supply chain is important for the stability of the global oil market," said the statement, which also noted that "the transparency and regulation of financial markets should be improved."

Al-Naimi also said that the kingdom was willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009, reversing previous statements that the country would not go beyond that figure.

"In addition, we have identified a series of future crude oil mega-increments totaling another 2.5 million barrels per day of capacity that could be built if and when crude oil demand levels warrant their development," he said.

The U.S. and other Western nations have put increasing pressure on Saudi Arabia to increase production, saying insufficient oil production has not kept pace with growing demand.

Earlier Sunday, King Abdullah also said Saudi Arabia was not to blame for soaring oil prices and instead pointed his finger at speculators, high fuel taxes in consuming countries and increased oil consumption in developing economies.

"There are several factors behind the unjustified, swift rise in oil prices and they are: speculators who play the market out of selfish interests, increased consumption by several developing economies and additional taxes on oil in several consuming countries," the king said.

Abdullah urged the summit's delegates to "uncover the truth" and dispel rumors to get the "real and full reasons" behind the skyrocketing price of oil.

Saudi Arabia increased oil production by 300,000 barrels a day in May, and a Saudi official confirmed Saturday that the country would add another 200,000 barrels a day in July - for a total of 9.7 million barrels a day.

British Prime Minister Gordon Brown also called for future commitments from producers for increased oil and gas supply but urged that all countries should improve energy efficiency and develop alternative sources of energy, including nuclear power.

Earlier Sunday, U.S. Energy Secretary Samuel Bodman again called on Saudi Arabia to increase production, saying it has not kept pace with growing demand.

Bodman said world oil consumption growth has averaged about 1.8 percent per year since 2003 with the largest share of that growth coming from developing countries like China, India and countries in the Middle East, he said.

But for the past three years, global oil production has remained constant at roughly 85 million barrels a day, and OPEC production has remained largely flat, he said in a written statement.

"I believe that most of us agree on one thing: Prices are too high at present. And unless we act, the situation will remain unsustainable," he said in the statement.

The kingdom called for Sunday's unusual meeting in Jiddah between oil producing and consuming nations as a way to show that it was not deaf to international cries that high oil prices have caused social and economic turmoil.

The Gulf nation also has become increasingly concerned that record oil prices could hinder growth in the U.S. and other major industrialized economies, potentially leading to a decline in oil demand and a sharp drop-off in prices.

Also Sunday, Abdullah called for the creation of a $1 billion energy initiative for poor countries to help them combat the rising cost of fuel. He also said Saudi Arabia would contribute $500 million to help give poor countries loans to finance development and energy projects.

"Next steps, both in the U.S. and in oil producing countries, will be to look at energy alternatives, additional oil exploration, and to possibly regulate the oil traders," Falk reports, "but what is clearly the focus of the Jeddah summit is to increase supply to meet increased demand, in an effort to avert instability in the developing world and decrease economic dislocation in industrialized countries as well."

Associated Press Writers Sebastian Abbot and Donna Abu Nasr contributed to this report.