OPEC source: Saudi has started pumping extra oil

DUBAI, United Arab Emirates - Saudi Arabia has started pumping the extra oil it had promised earlier this month in an effort to ease fuel prices, an official from an OPEC country said Saturday.

Saudi Arabia's national oil company Aramco raised production this week, according to the official, who spoke on condition of anonymity. He did not say how much more oil the kingdom was pumping, but the Saudis said early this month they would increase oil output by 500,000 barrels a day.

Oil traders in Asia confirmed they had been told to expect more Saudi oil in August, when the additional oil would reach the markets.

The unilateral Saudi move comes despite criticism from the Organization of Petroleum Exporting Countries and a lack of consensus among members.

On Friday, OPEC President Ali Rodriguez had said Saudi Arabia would not increase current output unless it got approval from OPEC partners. Rodriguez has said he and other OPEC counterparts felt the time was not ripe for an immediate increase.

Rodriguez, also Venezuela's oil minister, was in Iran on Saturday as part of a tour of OPEC countries. In the meetings, the Iranian president and other officials called for OPEC producers to restrain from pumping more oil, saying the cartel needs to remain united and firm if it is to remain effective.

''This is not possible unless all members look toward the interests of producing nations,'' Iranian President Mohammad Khatami told Rodriguez, the official Islamic Republic News Agency reported. Khatami said all OPEC members must abide by the cartel's decisions.

''I believe there are hands at work to disrupt the balance between supply and demand and bring about a price collapse that will result in irreparable damages to producing nations,'' IRNA quoted Khatami as saying.

OPEC producers agreed to bring an additional 708,000 barrels a day on the market starting this month, but the hike so far has not reduced prices.

Saudi Oil Minister Ali Naimi has said his country would like to see current prices of about $30 a barrel come down to $25 a barrel. Analysts said that for prices to come down, Saudi Arabia had to stick to its announced plans.

''Once the promise was made, that oil needs to be put on the market. Only the addition of that oil will have an effect on prices,'' said Brad Bourland, chief economist at the Saudi American Bank.

Saudi Arabia also has been under pressure from the United States, the world's largest oil consumer and a close ally, to bring prices down. Riyadh promised the Clinton administration earlier this month to increase production, a Saudi diplomat said.

OPEC members reacted angrily to Saudi Arabia's July 3 statement that it was increasing production. In an attempt to create a unified front, the Saudis have been trying to get other members to share in the increase. So far, only non-OPEC Mexico has agreed to increase production, Saudi oil officials have said.

Except for Saudi Arabia, Kuwait and the United Arab Emirates, OPEC producers do not have the spare capacity to join in an output increase. Other OPEC producers fear that additional crude on the market could lead to a collapse in prices, similar to the one in 1998, when a barrel was selling for under $11.

OPEC's official overall output is 25.4 million barrels a day, about a third of which comes from Saudi Arabia.

OPEC is scheduled to meet in Vienna, Austria, on Sept. 10. Saudi Arabia is believed to have been lobbying for an emergency OPEC meeting next week, but Iranian Oil Minister Bijan Namdar Zanganeh said Rodriguez and Iran oppose such a meeting.