Saudi unlikely to lift oil output quickly

WASHINGTON, May 4 (AFP): Saudi Arabia is unlikely to boost oil production quickly to ease the rise of crude prices, because it needs high prices for its own increased spending, analysts at an international banking think tank said yesterday. After producing 8.6 million barrels a day in 2010, the world's leading oil supplier will only kick up production to about 8.9 million barrels this year, said analysts at the Washington-based Institute of International Finance. They said Riyadh needs the higher prices to offset its sharp increase in spending, an effort aimed in part at assuaging Saudis amid a surge in public unrest across the Middle East and North Africa. "So far the production of crude oil in Saudi Arabia for the first quarter was around 8.7, 8.8 (million barrels a day). And recently some unconfirmed reports said that production dropped in March," said Garbis Iradian, the IIF's deputy director for Africa and the Middle East. "So we don't expect crude oil production in Saudi Arabia will rise over nine million barrels a day," he said. The Saudi government is overwhelmingly dependent on income from oil exports to fund its budget, and in December economists calculated that expected 2011 spending was based on the country earning $70 to $73 dollars a barrel. But Iradian said that the figure is much higher after a February spending hike announced by King Abdullah.