Top oil exporter Saudi Arabia will be able to pump at 12.5 million barrels per day for as long as the market needs when new capacity comes online next year, a Saudi oil official told Reuters on Tuesday.

BusinessWeek magazine reported last week that the kingdom would only be able to produce oil at maximum capacity for a short period of time before scaling back output.

"This is sustainable for as long as the market needs it," he said. "We are on track to reach production capacity of 12.5 million bpd by the middle of next year and we will do it."    

Saudi Arabia was pumping at 9.7 million bpd in July and had no plans to change output in August, the official said.

The kingdom is pumping at the highest rate since 1981, and has boosted output by 550,000 bpd since May.

Oil Minister Ali Al-Naimi said last month that the world's biggest oil exporter was ready to pump more for the rest of the year if there was demand from customers.

The kingdom called an emergency meeting of energy powers in Jeddah at the end of June to address high prices, but oil has continued its rise. US crude hit a fresh record of $147.27 a barrel on Friday.

Saudi Arabia was due to bring online the last of a set of projects to boost output capacity to 12.5 million bpd in June 2009.

BusinessWeek reported that state oil firm Saudi Aramco, which will hold 12 million bpd of total Saudi capacity, would only be able to pump at full speed for a short time before reducing output to 10.4 million bpd.

Current Saudi capacity is around 11.3 million bpd. Aramco aims to bring online the next increase, the 500,000 bpd Khursaniyah oilfield, in August. That project has been delayed from a planned start in December. Despite the Khursaniyah setback, Saudi oil executives and officials have said they expect no further delays at other projects to boost output.

The kingdom has outlined plans to take total capacity to 15 million bpd in coming years, and has said it could pump at that level for at least 30 years.

Saudi Arabia holds almost all the world's spare oil capacity and is the only producer that can bring online significant additional output quickly to cover any emergency in global supplies. The holder of over a fifth of global oil reserves has a long-held policy of keeping 1.5-2.0 million bpd of idle capacity. - Reuters