June 12, 2007	Tuesday	Jamadi-ul-Awwal 26, 1428

RIYADH, June 11: Saudi Arabia has notified major Asian customers that July crude shipments would be kept at June levels, some 10 per cent below the contracted supplies. Industry sources indicated that Saudi Arabia has informed customers in Japan and South Korea that it would supply crude oil at 9.5-10.0 per cent below the contracted volumes in July, the same as in June.

Saudi cuts have remained unchanged since April supplies, a deeper reduction compared with 7-8 per cent below contracted volumes for March. Saudi Arabia sells about half of its 7-million barrels per day of oil exports to Asia, including Japan, which buys about 1.1-million barrels of crude from the kingdom everyday.

According to some estimates, Opec production in May was higher than April.

The 10 members of the Opec bound by the group's output agreements produced an average of 26.64 million barrels per day (b/d) in May, a Platts survey showed on June 8.

This is an increase of 70,000 b/d from April's 26.57 million b/d and is above the group's production targets.

Total production from all 12 members, including Iraq which does not participate in Opec output pacts and Angola which joined the group at the beginning of this year, rose by 100,000 b/d to 30.29 million b/d from April's 30.19 million b/d, the survey showed.

Increases from Algeria, Iran, Kuwait, Qatar, Saudi Arabia, the UAE and Angola totaling 190,000 b/d were partly offset by 90,000 b/d in decreases from Nigeria, despite the restoration of some shut-in production outages there and Iraq, the survey emphasised.

However, it seems Saudi Arabia was still keeping a cap on supply. Other Opec members also appear to be taking the same line.

The Opec is trying to keep a balance between global oil supply and demand but sees no need to meet before a scheduled gathering in September, the group's president Mohammed bin Dhaen al-Hamli said last week.

Iranian Oil Minister Kazem Vaziri-Hamaneh also reiterated on Monday, on the sidelines of a conference in Kaula Lumpur, that there was no shortage of crude oil in the market and the cartel has no plans to increase supplies, as the current strong prices of around $69 a barrel were for reasons other than supply constraints.

"There is sufficient crude oil in the market, and there is no shortage of crude oil," he said when asked if the Opec should raise supplies to the market to ease high oil prices.

Oil prices rose Monday after Iran's oil minister statement.

Light, sweet crude for July delivery gained 43 cents to $65.19 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.

The contract had plunged by more than $2 a barrel on Friday. Brent crude for July delivery rose 22 cents to $68.82 a barrel on the ICE Futures exchange in London.

In other Nymex trading, heating oil futures rose more than a cent to $1.9103 a gallon (3.8 liters) while natural gas rose 5.7 cents to $7.720 per 1,000 cubic feet.