April 10 (Bloomberg) -- OPEC shouldn't produce more oil because the market is already well supplied, Saudi Arabian Oil Minister Ali al-Naimi said.

The minister, representing the world's biggest oil exporter and the most influential member of the Organization of Petroleum Exporting Countries, blamed record crude prices above $100 a barrel on the falling value of the U.S. dollar.

``We are not going to dump oil in the market,'' Naimi told reporters at the International Oil Summit today in Paris. ``The world is producing more oil than it is consuming.''

OPEC, which controls more than 40 percent of the world supply, has no plans to review its output level before a scheduled formal meeting in September, he said, dismissing consumers' call for more crude.

``There are many, many reasons for the price increase, least of which is the supply side,'' the minister said.

The weak dollar, combined with a lack of spare production capacity and geopolitical risks, is supporting crude oil prices, International Energy Agency Executive Director Nobuo Tanaka said at the same conference today.

Naimi agreed with that assessment, adding that Saudi Arabia, the world's top oil exporter, will invest $90 billion in the next five years to boost capacity to produce and process oil and gas.

Kingdom's Capacity

Saudi Arabia's crude oil production capacity will reach 12.5 million barrels a day next year, and may rise to 15 million barrels a day at some point in the future, he said. Capacity is about 10.8 million barrels a day now, according to Bloomberg estimates.

The kingdom is now producing 9.2 million barrels a day, he said, which is above its OPEC quota of 8.9 million barrels a day. ``If there is a buyer, we will sell to him,'' he said.

Tanaka, whose Paris-based agency represents 27 consumer nations, urged OPEC to allow inventories to build so that they provide a bigger cushion to potential supply disruptions.

Record oil prices alone though, are not a reason for the IEA to invoke the use of emergency stockpiles, Tanaka said.

Naimi said the forthcoming April 20-22 International Energy Forum in Rome will be an occasion for OPEC members to discuss the oil market situation directly with consuming nations.

The Saudi minister has previously said prices are unlikely to fall below about $60 or $70 because that's the cost of producing alternatives such as tar sands or biofuels. Total SA Chief Executive Officer Christophe de Margerie said today at the conference that $70 or $80 represents a ``new floor,'' linked to the costs of developing new oil fields as exploration costs soar.

Saudi Arabia is the only OPEC member with substantial spare output capacity, and can add more than 1.6 million barrels a day to production while OPEC's other 12 members are close to capacity already, Bloomberg data show.

Consumer Calls

Oil traded in New York has more than doubled in three years and rose to a record $112.21 yesterday. Soaring prices have prompted calls from U.S. President George W. Bush for Saudi Arabia and OPEC to boost supply and help the world's largest energy consumer avoid a recession.

Crude will average $91.08 this year, according to the median estimate of 30 analysts surveyed by Bloomberg.

OPEC President and Algerian Oil Minister Chakib Khelil and Qatar's Oil Minister Abdullah bin Hamad al-Attiyah also said this week that the group shouldn't increase output, as end of the winter season in the northern hemisphere and the U.S. economic slowdown reduce fuel consumption.

``OPEC is giving out the same old message about the market being well supported, and if we just take fundamentals alone, it is probably correct,'' said John Hall, director of U.K. energy consultants John Hall Associates Ltd. ``However, fundamentals have been kicked out by speculators who lost out in equity markets and who are seeing opportunities in commodities.''

OPEC pumped 32.35 million barrels of crude a day in March, according to Bloomberg estimates, and kept its production targets unchanged at its last three meetings on March 5, Feb. 1 and Dec. 5.

To contact the reporters on this story: Maher Chmaytelli in Paris at mchmaytelli@bloomberg.netAyesha Daya in Dubai at adaya1@bloomberg.net

Last Updated: April 10, 2008 09:54 EDT