"We will continue to be a source of stability for world energy markets," Saudi Oil Minister Ali Al-Naimi told an energy conference hosted by Cambridge Energy Research Associates. "We are addressing the problem of availability head-on."

But, when asked if there were plans to boost capacity beyond 12.5 million bpd, Naimi made a reference to President George W Bush's State of the Union pledge to slash US oil imports from Middle East suppliers by 75 percent by 2025.

"What concerns us is all the talk about not wanting our oil," Naimi said. "It's not a major bump; it's something to take into consideration."

Speaking on US soil about Bush's comments, Naimi had to walk a delicate line.

His speaker's podium at a posh Houston hotel was a stone's throw from the headquarters of the US arm of Saudi Aramco, the government-owned oil company, which plans to spend billions of dollars to add about 300,000 bpd of capacity to an unspecified Gulf Coast refinery.

The head of the International Energy Agency, the West's energy watchdog, said this week that Bush's call to cut Middle East oil imports would not help persuade OPEC to spend the huge amounts of cash needed to meet future oil demand.

"We are absolutely delighted that President Bush has recognized at last that his country is addicted to oil," IEA head Claude Mandil said. "But the way he said it - to get rid of dependence on Middle East oil - will not help us convince those countries that they will have to increase their investment."

Bush's comments have tested an attempt to polish US-Saudi relations strained by Middle East tensions. Bush met Saudi King Abdullah - then the kingdom's Crown Prince - at Bush's ranch in Texas last year to discuss the kingdom's $50 billion expansion plans.

The two nations have since embarked on a "strategic dialogue" to balance priorities of the world's biggest oil producer and its biggest consumer with meetings in Riyadh and Washington.

With US oil futures around $64 a barrel - not far off their record price of $70.85 set last year - OPEC producers are pumping at 25-year highs.

OPEC, provider of more than a third of the world's oil, sealed a deal in Vienna last week to keep its production limit at 28 million bpd, with prices approaching $70 and worries over supplies from OPEC members Iran, Nigeria and energy powerhouse Russia. A Reuters survey of consultants, shippers, industry and OPEC sources released Tuesday indicated the producer group pumped 29.54 million bpd in January, down 190,000 bpd from December.

Naimi said about $15, or almost one quarter, of current oil prices are due to speculation by large investment funds and geopolitical jitters. "There is a substantial piece (of the price), at least $15 today, that is not supported by fundamentals," Naimi said.

Naimi continued to accentuate a global shortage of refining capacity, which he sees as a prime mover behind high prices.

For its part, Saudi Arabia will double its refining capacity through joint ventures in China, South Korea and on its own soil to reach 6 million bpd in five years, Naimi said.

Some of those refineries will be able to produce gasoline and other refined products that meet tighter environmental regulations in the United States and Europe, Naimi said.

Saudi Arabia holds up to 2 million bpd of available capacity in reserve to meet supply shortages - the only nation in the world with the ability to put substantial extra oil onto the market in short order.

Naimi said he would be "more comfortable" with global spare reserves of 5 million to 7 million bpd.