May 19 (Bloomberg) -- Oil rose as OPEC's president said increased crude production by Saudi Arabia next month won't reduce prices, which are being driven by the weak U.S. dollar.

Saudi Arabia, the world's largest oil exporter, will increase production 300,000 barrels a day next month after customers requested more oil. That won't subdue prices, driven higher by a weaker U.S. dollar, the Organization of Petroleum Exporting Countries's president, Chakib Khelil, said today.

``The market is looking for any excuse to go higher,'' said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. ``The 300,000 barrels a day hike in June didn't help at all. The market is still very robust.''

Crude oil for June delivery rose as much as $1.48 a barrel, or 1.2 percent, to $127.77 a barrel on the New York Mercantile Exchange. It traded at $126.89 at 1:51 p.m. in London. The contract gained $2.17, or 1.7 percent, to $126.29 on May 16, the highest close since futures trading began in 1983.

The Nymex June contract expires at the end of trading tomorrow. The more-widely held July contract was at $127.28 a barrel at 1:18 p.m. in London.

Saudi Arabia will boost production by about 3.3 percent to 9.45 million barrels a day in June, Oil Minister Ali al-Naimi said in Riyadh following a meeting between Bush and Saudi Arabia's King Abdullah.

Khelil said that represented a ``sovereign decision'' on the part of Saudi Arabia, rather than a decision that had the backing of OPEC. Khelil spoke in an interview in Algiers where he is attending a conference.

`Too Small'

The output increase ``is too small to have any major effect,'' said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. ``They might have increased production anyhow because of seasonal adjustments.''

Brent crude oil for July settlement rose as much as $1.01 to $126 a barrel on London's ICE Futures Europe exchange. The contract traded at $125.90 at 1:19 p.m. local time. It rose $2.36, or 1.9 percent, to $124.99 a barrel on May 16, a record close.

A Norwegian airport strike may force the closure of some North Sea crude production as it threatens to cut access to offshore platforms.

Unions shut down six airports, including Bergen and Kristiansund, the two biggest bases for helicopter transport to and from oil platforms on the Norwegian continental shelf. The strike may extend tomorrow to Stavanger's Sola airport amid a labor dispute with Avinor AS, which operates 46 airports.

ConocoPhillips said it may have to cut output from the Ekofisk field if a strike spreads to Stavanger. Ekofisk pumps about 400,000 barrels of oil a day.

StatoilHydro ASA, Norway's largest oil company, said access for thousands of workers to its oil platforms is limited by the strike which could have ``even larger consequences'' if it spreads to Stavanger.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Last Updated: May 19, 2008 08:54 EDT