Crude oil topped the psychological milestone of $50 per barrel Tuesday for the first time, and a Saudi Arabian oil official said the world's largest petroleum exporter would raise its production capacity by 15 percent in a bid to calm prices.
Analysts said instability in the Middle East, political unrest in Nigeria, Africa's top oil exporter, and damage to U.S. production from the Caribbean's hurricanes were keeping traders on edge about world supplies. Some said the price may not be sustainable and may soon fall.
In response to the increase, Saudi Arabia announced it will raise its oil production capacity from 9.5 million barrels a day to 11 million barrels in order to "stabilize" prices.
By increasing capacity, Saudi Arabia will be able to raise production when it wants. A Saudi oil ministry official, speaking on condition of anonymity, said that the kingdom would increase production "depending on demand."
The capacity increase by the world's largest oil exporter will go into effect within weeks, using new