Saudi Arabia Continues Its High Oil Production Policy

A gas flame is seen in the desert near the Khurais oilfield, about 160 km (99 miles) from Riyadh, Saudi Arabia June 23, 2008. REUTERS/Ali Jarekji/File Photo

Reuters: Exclusive: Saudi signals it may hit new oil output record ahead of freeze talks - sources

Saudi Arabia is sending signals that it could boost its crude oil supplies in August to a new record level, overtaking Russia, the world's top oil producer, as it gets ready for tough talks next month for a global output freeze pact.

Industry sources say the kingdom, already the world's largest oil exporter, started to raise production from June, after holding it steady for the first half of the year, to meet rising seasonal domestic demand as well as higher export requirements.

Higher production could give it more leverage during talks in September when both OPEC and non-OPEC producers are expected to revive a freeze deal to support oil prices, the sources say.

Saudi Arabia appears to want higher prices, but agreeing a level to freeze supplies will be the main obstacle to a deal.

Some analysts, however, said using hard negotiating tactics could backfire on Riyadh.

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WNU Editor: The oil rally is still continuing .... Oil Rallies On, Ignoring Saudi Production Claims (OilPrice). But while these production levels are keeping prices low, the chaos in Venezuela may change this .... Venezuela chaos: The biggest threat to cheap oil (CNN).