CRUDE oil futures soared to new records yesterday as Saudi Arabia, the world’s largest oil exporter, said it was aiming for a price of between $40 and $50 per barrel, a level almost double the Opec cartel’s previous price target.

The price of a barrel of US light crude raced above $56 in New York as traders reacted to a sudden and unexpected fall in US petrol stocks. In London the Brent futures contract gained almost a dollar per barrel to $54.75, a record.

The comments from Ali al-Naimi, the Saudi Oil Minister, emerged as Opec ministers rallied behind a Saudi call for a 500,000 barrel per day (bpd) increase in the cartel’s production ceiling. A meeting of the cartel in Iran yesterday agreed to raise output to 27.5 million bpd but the promise of a 2 per cent increase in oil supplies failed to dampen the oil market’s concern about ever-rising demand.

Mr al-Naimi expressed concern about the level of the oil price yesterday but gave support for only a modest decline: “Current oil price levels of $55 are high and we want prices to be between $40 and $50 a barrel,” he said.

His advocacy of a price range that is double the previous Opec band of between $22 and $28 will raise alarm bells in Washington where Sam Bodman, the US Energy Secretary, has been engaged in an intense lobby exercise, urging Opec members to support a production increase.

Saudi Arabia led calls for lower oil prices this week and was the prime mover behind yesterday’s agreement to raise output. However, financial pressures on the largest Opec producer are mounting and the continuing fall in the US dollar has raised sharply the kingdom’s bills. The Centre for Global Energy Studies, an energy consultancy sponsored by Sheikh Yamani, the former Saudi Oil Minister, reckons the kingdom needs an oil price of about $42 to meet expenses and reduce its huge debt.

Yesterday’s surge in the crude price was blamed on a 2.9 million barrel fall in US petrol stocks, three times the expected level, but crude oil inventories rose more than expected, leaving energy analysts confounded by the continuing rise.

In its official statement, Opec yesterday blamed speculators for the continuing strength and volatility in the crude oil price. “The market is fundamentally well-supplied,” Opec said. “Price pressure and volatility (is) coming from increased activity of non-commercials in the futures market, such as hedge funds and, more recently, pension and index funds.”

Opec adopted a price band mechanism in 2000 in an attempt to restore discipline to an organisation wracked by internal dissent and rivalry. The $22-28 per barrel price range included a mechanism whereby the cartel would increase or reduce supplies after prolonged periods when prices exceeded or fell below the price band.

Last year’s surge to $50 per barrel led to a suspension of the price band and yesterday’s statement by the Saudi oil minister is the first indication of its preferred level of price support.

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