RIYADH, Nov 29: Saudi Arabia plans to expand crude output capacity by 14 per cent to ease concern of potential shortages, the Saudi Oil Minister Ali al-Naimi said in London.

Quoting him the Bloomberg reported, "Demand for Saudi oil will continue to increase in the coming years." Al-Naimi is attending a Middle East conference organized by the Royal Institute of International Affairs.

He said Saudi Arabia will boost its limit to 12.5 million barrels, from 11 million a day now, as consumption advances around the world. However, no timetable for the capacity increment was given.

The Organization of Petroleum Exporting Countries is pumping the most oil in 25 years in response to record demand growth and prices, which peaked at $55.67 a barrel in New York on Oct 25 on concern about shortages and disruptions to supply from Iraq, Nigeria and Russia. When asked about a weakening dollar, Bloomberg quoted Al-Naimi as saying that Opec has decided to maintain its sales in the US currency.

"OPEC has looked and looked, and every strategic team comes back with a statement that there is no merit in a change," he said. "Throughout history of industry, oil is priced in dollars. I don't know if there will be much difference whether you change currency, go to a basket or stay with the dollar."

OPEC raised its production quota to 27 million barrels a day on Nov 1, the highest on record for the 10 members that have self-imposed limits. OPEC would review the output ceiling on December 10 in Cairo. Saudi Arabia is now producing close to 9.5 million barrels a day, the minister said.

Oil prices have dropped 10 percent since reaching their peak. The 10 OPEC members with quotas plus Iraq produced 30.61 millions barrels of crude oil a day in October, according to a Bloomberg survey of oil companies, producers and analysts published on Nov 3. It was the most oil the group has pumped since November 1979, US Energy Department figures showed.

OPEC and its members are now producing almost as much as they can, trying to 'catch up' with demand, al-Naimi said. Increasing oil use is the "primary factor" in rising oil prices, he said. "The fear factor," or concern that shortages will develop, probably adds $10 to $15 a barrel to prices, he said.

In response to questions, al-Naimi declined at least twice to say what he thought the price of crude ought to be. "It is that price which consumers, investors and producers are happy with," he said.

Previously, al-Naimi has said he preferred a price of $25 a barrel. OPEC formally sets a target for prices based on different blends of crude. That target has remained unchanged at $22 to $28 a barrel, although the last time the basket price actually fell within that range was December 2003.