Saudi Arabia probably won't cut oil output: Oil Minister

AFX-Asia, London

Saudi Arabia is not inclined to cut its oil output, the country's oil minister Ali al-Naimi said in an interview with the Financial Times, ahead of the OPEC ministers meeting on Monday.

"The reason why we probably would not reduce production is not because the price would go up and make consumers unhappy but because we are after stability (in the oil market)", said Naimi.

He emphasized that he was speaking only "hypothetically" in view of the double-edged uncertainties on the impact on the oil market of an economic downturn and of the expected U.S.-led attack on Afghanistan.

He acknowledged that the oil price might rise in the immediate wake of an attack, if the market were to conjure up "visions of saboteurs in the oil fields". But "if the attack is restricted to non-oil-producing countries, it should have no bearing on the oil market", he said. Saudi Arabia would in any case put its spare capacity of 3 million barrels a day to work, if needed to fill any shortages.

Otherwise, the global economic mood was such that "psychologically - regardless of what OPEC does - the oil market will go down", he said. "I don't know that we need to add to this uncertainty" by OPEC changing its output targets, he added.

The OPEC cartel market mechanism calls for OPEC to cut production by at least 500,000 barrels a day, if the basket oil price -- an average of seven world crudes -- stays below US$22 for 10 consecutive working days.

That basket price has so far stayed below its $22 floor for seven consecutive says.

Over the longer term, Naimi was optimistic about OPEC regaining a $25 price.

"The world won't sit and accept a recession. It is working to reinvigorate the economy; central bankers are cutting interest rates. The only thing is that we need to get through the period we are in now."