OSAC EARLY BIRD

09 JUNE 2011Use of these articles does not reflect official endorsement.

Reproduction for private use or gain is subject to original copyright restrictions.

(CTRL + Click on Title to Go To Story)

From Arab NewsNATIONAL GUARD BUYING ADVANCED FIGHTERS TO FURTHER BOOST SECURITY

DIABETES IN SAUDI ARABIA MIGHT GROW BY 283% IN TWO DECADES: EXPERTS

From The New York TimesYEMEN UNCERTAINTY GROWS; LEADER’S BURNS CALLED SEVERE

From CNNSYRIAN REFUGEES CROWD ON TURKISH BORDER

From The Washington PostIRAN TO MOVE ITS MOST SENSITIVE NUCLEAR EQUIPMENT TO BUNKER

From ReutersBIN LADEN WILL "HAUNT" AMERICA: AL QAEDA DEPUTY

From Yahoo! NewsGADHAFI STRIKES LIBYA REBELS, NATO POUNDS TRIPOLI

OPEC OIL TALKS COLLAPSE, NO OUTPUT DEAL

From Trade ArabiaSAUDI ECONOMY SET TO GROW BY 6PC RIYADH: 4 HOURS AND 32 MINUTES AGO

Photo by Bruce Kendall

National Guard buying advanced fighters to further boost security

Prince Miteb bin Abdullah, state minister and commander of the National Guard, on Tuesday confirmed plans to purchase advanced war planes for the security organization.

“Our aircraft purchase plan is progressing well. We don’t face any obstacles,” he said.Miteb made this comment while attending a graduation ceremony for the infantry regiment of the Prince Turki Brigade in Khashm Al-An, near Riyadh.

He did not say what kind of aircraft the National Guard was looking for. However, he pointed out that his organization required aircraft with certain specifications.

“It will take time as such planes will not be readily available like cars,” he pointed out.

Miteb said the National Guard is ready to face any eventualities. “Our forces are always well-prepared to carry out its national duty, whenever it is required,” the Saudi Press Agency quoted him as saying.

The prince urged the newly graduated officers to work hard in the service of the nation. He praised the high standard of military training they received. He also watched a demonstration by graduates displaying their various military skills.

He later visited an exhibition organized by the National Guard, displaying its efforts to fight drugs smuggling. The prince urged all Saudis to support the government’s endeavors to combat the social evil.

The function was attended by Abdul Mohsen Al-Tuwaijri, assistant deputy commander, Maj. Gen. Turki bin Abdullah, commander of the brigade, and other senior officers of the National Guard.

“We are happy that this graduation ceremony coincides with the sixth anniversary of Custodian of the Two Holy Mosques King Abdullah’s rule,” said Maj. Gen. Turki. He underscored the

tremendous progress achieved by Saudi Arabia during the king’s reign.

Diabetes in Saudi Arabia might grow by 283% in two decades: experts

Two British experts on diabetes have warned that the number of diabetics in Saudi Arabia will grow by 283 percent by 2030 due to changes in lifestyle and diet leading to increasing levels of obesity.

"For this reason it is necessary for Saudi nationals to be more careful about their lifestyles, especially as it pertains to the food that is readily available here and which they can well afford," said Philip David Home, professor at Newcastle University, during a news briefing recently in Riyadh.

He added that diabetes and heart disease are the two main causes of death in the Kingdom, which has the second highest rate of diabetes in the GCC after the UAE.

Asked how to control the disease, he said that regular physical exercise, wholesome dietary habits and healthy lifestyle are some of the best ways to protect people in the Kingdom from developing Type 2 diabetes — a health disorder forerunner to many other medical complications.

Harry Howlett, a London-based specialist in diabetes research and education, outlined the role of metformin in the management of patients with Type 2 diabetes.

It is used as a first-line treatment of Type 2 diabetes in obese people. It is also used when diet and exercise fail to control blood sugar levels.

It can also be used in combination with other anti-diabetic medicines to provide better control of blood sugar.

"Type 2 diabetes is the most common form of the disease.

Numerous people in the Kingdom have been diagnosed with this kind of disease and many more are not aware that they are at high risk," Howlett said.A report said that diabetes can cause 39 percent of artery diseases, 32 percent of diabetic patients suffer from kidney diseases that lead to kidney failure and 23 percent suffer from eye diseases.

Yemen Uncertainty Grows; Leader’s Burns Called Severe

The uncertainty surrounding the political future of Yemen’s president, Ali Abdullah Saleh, deepened Tuesday as he was treated for far more severe burns than had first been disclosed, while maneuvering intensified in the capitals of Yemen, the United States and Saudi Arabia to head off an emerging and dangerous power vacuum.

Mr. Saleh’s sudden departure from Yemen initially prompted warring factions to call a cease-fire, but that failed to stabilize the badly fractured nation as fighting on Tuesday intensified in the south between militants and the government, leaving dozens dead.

While mediators move toward establishing a transitional government, Mr. Saleh’s condition and his prospects for recovery emerged as the crucial factor in determining who will rule the nation, which is an important ally of the United States in fighting terrorism.

While Washington and Riyadh have wanted Mr. Saleh to step down in the face of months of protests and increasing violence, there was no agreement Tuesday on how to proceed while he is in the hospital here.

Interpretations of Mr. Saleh’s medical state have varied according to the competing demands of the

camps that would like different outcomes in Yemen.

Those wanting him to remain in power suggest that he is fully conscious and in control and expected to return to Yemen any day.

Those who would like to see him step down portray his condition as more dire. He has not been seen publicly since the attack.

There has been some bickering within the Saudi royal family about the wisdom of pushing out a neighboring head of state, and King Abdullah would never issue an ultimatum to a fellow Arab leader to step down, especially in the face of the youth-driven uprisings shaking the region, diplomats said on the condition of anonymity in keeping with protocol.

The working plan for a transition of power one Mr. Saleh has rejected three times was outlined by the Gulf Cooperation Council and called for elections 90 days after he officially resigned.

But with Washington and Riyadh eager for a transitional government to take power, the council’s plan is expected to be the focus of intense discussions in Abu Dhabi, in the United Arab Emirates, on Thursday on the sidelines of a meeting about Libya.

Mr. Saleh, who was flown to Saudi Arabia on Saturday along with the prime minister and other top aides for treatment at the Armed Forces Hospital in Riyadh, was first said to have light injuries, including burns on his face, neck and arms caused by an explosion at the palace mosque during Friday Prayer.

On Tuesday, it was revealed that he has suffered burns on 40 percent of his body and that a large wooden shard sliced into him and might have punctured a lung, said Abdul Rahman al-Rashed, the head of the Arabiya television network.

But the explosion left Mr. Saleh with burns on his back as well, said a person familiar with his injuries, speaking on the condition of anonymity, and although not life-threatening they were severe enough to require strong sedation for the pain and several months of convalescence.

“His face was quite charred,” said a Western official, speaking anonymously in accordance with government restrictions. “The burns are serious; he is not as well as his aides are portraying it.” An Arab diplomat said, “It is not life threatening but will require a lot of care.”

An aide reached at the hospital refused to confirm or deny the extent of the president’s injuries. The source of the explosion, which killed several guards and the imam of the mosque and wounded a dozen government officials and Saleh allies, has also been mysterious.

It was initially believed to have come from a mortar or rocket attack from outside the compound. But as the investigation continued, there have been reports by officials in Yemen and in the press there suggesting more of an inside job, a diplomatic source noted, including in the minbar, or pulpit.

The splintering wood hit many, including the president, like spears. The reports have said the explosive material also apparently contained some kind of agent that spurred flames, noted the diplomatic source. Mr. Saleh was said to be bowing at the time of the explosion.

“He was very close, and that is why he was burned,” the source said. Amid the jockeying for political position, fighting flared in the city of Taiz and in Yemen’s restive southern coastal region.

The violence included fierce battles between government troops and Islamist rebels in Zinjibar, which the rebels captured about two weeks ago.

Yemen’s Defense Ministry issued a statement saying more than 30 militants suspected to belong to Al Qaeda had been killed after they attacked an army checkpoint outside Zinjibar.

The military is gearing up for a major assault to force the militants out, Yemeni military officials said.

But a local tribal leader with ties to the militants said that nine had been killed, including a prominent Qaeda commander known as Abu Fawaz al-Maribi.

Altogether, 17 members of Al Qaeda have been killed in and around the city since it was overrun by militants this month, said the tribal leader, who spoke on the condition of anonymity for fear of retaliation.

He also said dozens of soldiers had been killed. The Defense Ministry did not provide a toll of soldiers. Zinjibar has been largely cut off since its capture.

In Taiz, the streets echoed with gunfire and artillery shells on Monday night as government forces fought armed tribesmen backing the pro-democracy protesters. Tanks could be seen firing on the city’s streets in images posted on Yemeni news sites.

“The attacks have been heavy,” said Hani Qahtani, a protester. “The sounds of it shake the entire city.” After almost two weeks of bitter fighting, the city faces a humanitarian crisis, residents said.

Violence also erupted along Yemen’s northern border with Saudi Arabia early Tuesday as an unidentified gunman trying to drive into Yemen from the Saudi province of Najran killed two Saudi

border police officers and wounded a third before being gunned down himself, the Saudi Interior Ministry said.

The border area has long been a conduit for smuggling of drugs, weapons and people from Yemen into its richer northern neighbor. Stability along the border is one main reason Saudi Arabia takes a keen interest in steadying the central government.

Syrian refugees crowd on Turkish border

About 100 Syrian refugees clustered, chanting and holding a Syrian flag, next to a border fence with Turkey, watched closely by several Turkish soldiers pacing in front of them.

Hours before-hand, Turkish authorities allowed around 120 Syrian refugees to cross into Turkish territory near the village of Karbeyaz, even though this is not an official border gate.

Refugees from the Syrian border town of Jisr Al-Shugur say tens of thousands of residents have fled over the last week, after bloody fighting erupted resulting in the deaths of scores of people.

The Syrian government claims more than 80 security forces were killed in an ambush by "armed groups" in Jisr Al-Shugur.

But residents of the blood-soaked town say fighting broke out between mutinying Syrian soldiers, after Syrian troops opened fire on anti-government demonstrators at the funeral of a slain protester.

"My friend was shot next to me when we were at a funeral for a martyr," said one Syrian refugee, speaking by telephone to CNN from a cluster of trees just on the other side of the hilly Syrian-Turkish border. "There is no milk

for children, no water. There is no bread (in Jisr Al-Shugur)....They poisoned the water and there is no more bread."

The refugee, who asked not to be identified, said he did not plan to flee into Turkey unless Syrian troops threatened him and his family at this make-shift safe haven along the frontier.

Activist Fadi Mustafa Soufi, speaking via Skype with CNN from the cluster of refugees along the frontier, said shortly after noon local time two women wounded in fighting in Jisr Al-Shugur arrived in a vehicle.

"One women was shot in the face but she's not dead yet," Soufi said.Soufi also said that among the refugees, there were several dozen soldiers who had defected and were now in civilian clothes.

On Tuesday night, a refugee woman named Um Ahmed told CNN she fled to the border with her daughters to escape what she believed would be an imminent Syrian government attack on Jisr Al-Shugur.

A growing number of Syrian refugees have fled to Turkey over the past month-and-a-half, raising fears of the possibility of a refugee exodus.

In late April, around 250 Syrian civilians fled across the border to the same Turkish village of Guvecci.

Since then, they have been housed in tents and fed by the Turkish Red Crescent at an old tobacco factory.

Turkish authorities have denied journalists permission to speak with the refugees. They also forbid refugees from leaving the compound.The number of refugees slowly swelled as the violence grew worse in Syria.

Local Turkish officials speaking on condition of anonymity tell CNN 41 Syrians crossed the border on Saturday. Several of them were wounded.

A doctor, also speaking on condition of anonymity, told CNN that more than 30 Syrians with gunshot and shrapnel wounds had been treated at a local hospital in Turkey in recent days.

Meanwhile, Soufi, the activist from Jisr Al-Shugur, said he saw the bodies of two seriously wounded Syrian men who died while being transported in cars to the Turkish border.

In the past, the Turkish government has made a show of medically evacuating civilian victims of violence in Iraq and Libya. But Ankara has taken a different approach with dozens of wounded civilians fleeing Syria.

Turkey fears a repeat of the enormous Kurdish refugee exodus from Northern Iraq in 1991. Ankara has also spent the last decade promoting cozy relations and lucrative economic ties with Syria's young president Bashar al-Assad.

The United Nations reports more than 1,000 people have been killed during anti-regime protests in Syria in less than three months.

Over the last month, the government of Turkish Prime Minister Recep Tayyip Erdogan began calling for reform in Damascus, in a bid to curb the escalating violence.

"It is out of question that we close the border at this point. The developments in Syria are saddening. We are watching in worry," Erdogan said Wednesday, according to the semi-official Anatolian Agency."We hope that Syria changes its attitude towards the civilians to a more tolerant one and realize its

steps for reform in a more convincing way for the civilians."

Iran to move its most sensitive nuclear equipment to bunker

Iran is moving its production of higher-enriched uranium to a mountain bunker where it plans to triple output by using more advanced centrifuges, state television reported Wednesday.

Iran says the announcement is a response to a letter Friday from Yukiya Amano, director general of the International Atomic Energy Agency, which reiterated “concerns about the possible military dimensions” of the Islamic Republic’s nuclear energy program.

“Our answer is increased work in the sphere of nuclear technology and know-how,” Iranian nuclear chief Fereydoun Abbasi told reporters after a cabinet meeting.

The moving of Iran’s most sensitive nuclear equipment deep inside a mountain had been predicted by Iranian nuclear officials in the past.

But the sharp increase in production of uranium enriched to nearly 20 percent is new and will further heighten tensions between Iran and world powers distrustful of the nature of the Iran’s nuclear program.

Currently, Iran is enriching uranium at its Natanz site, where the bulk of the output is nuclear fuel enriched to 3.5 percent suitable to power reactors that generate electricity.

The new location, named Fordo, is dug deep into a mountain next to a military base near the city of Qom, a center of Shiite learning.

It was long kept secret but now is monitored by the IAEA, the U.N. nuclear watchdog. The agency says there currently are no centrifuges inside the mountain bunker.

According to a February report by the agency, Fordo is to house at least 3,000 centrifuges, and Iran plans to feed uranium into them “by summer.” Iran says it will produce nuclear fuel enriched up to a level of nearly 20 percent using new, advanced enrichment equipment.

The country says it needs the higher-enriched uranium to operate a 44-year-old nuclear test reactor that was built by the United States and produces isotopes for use in nuclear medicine.

In his letter, the IAEA’s Amano called upon Iran to grant the agency more access to dispel worries over the militarization of its nuclear program.

“I also requested that Iran provide prompt access to relevant locations, equipment, documentation and persons,” Amano said in a statement Monday.

President Obama, in a joint news conference with German Chancellor Angela Merkel on Tuesday, said Iran continues to shun serious talks over its nuclear program and might face new sanctions by the United States and its allies.

“If the International Atomic Energy Agency this week determines again that Iran is continuing to ignore its international obligations, then we will have no choice but to consider additional steps, including potentially additional sanctions, to intensify the pressure on the Iranian regime,” Obama said.

Iran’s ambassador to the agency denied all accusations, calling them “politically motivated and unfounded,” the official Islamic Republic News Agency reported.Iranian President Mahmoud Ahmadinejad also dismissed the accusations, saying that they were “dictated by Washington.

” He warned Amano against being biased against Iran and stressed that all of the country’s nuclear activities were being carried out according to international law.

“There is no brake and no reverse gear on our nuclear program,” Ahmadinejad told reporters Tuesday.

Asked whether he would ever consider stopping the enrichment of uranium, a key demand of the United States and its allies, he replied, “No.”

Bin Laden will "haunt" America: al Qaeda deputy

Osama bin Laden's longtime lieutenant, Ayman al-Zawahri, said the United States faces rebellion throughout the Muslim world after killing the al Qaeda leader, according to a YouTube recording posted on Wednesday.

In what appeared to be his first public response to bin Laden's death in a U.S. commando raid in Pakistan last month, the Egyptian-born Zawahri warned Americans not to gloat and vowed to press ahead with al Qaeda's campaign against the United States and its allies.

"The Sheikh has departed, may God have mercy on him, to his God as a martyr, and we must continue on his path of jihad to expel the invaders from the land of Muslims and to purify it from injustice," Zawahri said in the 28-minute clip.

"Today, and thanks be to God, America is not facing an individual or a group ... but a rebelling nation which has awoken from its sleep in a jihadist renaissance challenging it wherever it is."Zawahri's association with bin Laden's predates the al Qaeda attacks on the United States in September 2001 that led to the wars in Afghanistan and Iraq.

While the bespectacled Zawahri has been touted as successor to bin Laden, experts on al Qaeda say that another Egyptian militant, Saif al-Adel, is in interim command of al Qaeda.

In the video, Zawahri warned Americans not to rejoice at bin Laden's death. "You should await what will befall you after every celebration," he said.

He condemned U.S. forces for burying bin Laden at sea, a move opposed by senior Muslim clerics as un-Islamic. The Americans said the burial included Muslim rite and took place at sea to deny bin Laden's followers a shrine.

"He terrified America when he was alive and is terrifying it as a dead man, to the point that they shudder at the prospect of giving him a grave because of what they know of the love of tens of millions for him," he said.

Bin Laden, Zawahri said, would continue to "haunt America and Israel and their Crusader allies, their corrupt agents.""His famous pledge that 'you won't dream of security until we live it as a reality and until you depart the land of Islam' will continue to deprive them of sleep."

Zawahri pledged allegiance to Taliban leader Mulla Omar, who is spearheading fighting against U.S.-led forces in Afghanistan, calling him the "emir of the faithful."

Zawahri praised the citizen revolts in his native Egypt and other Arab countries, calling on Pakistanis to follow suit: "Shake off the dust of humiliation and overthrow those who have sold you in the slave market to the United States."

Gadhafi strikes Libya rebels, NATO pounds Tripoli

Libyan leader Moammar Gadhafi, increasingly cornered under a stunning upturn in NATO

airstrikes, lashed back with renewed shelling of the western city of Misrata Wednesday, killing 10 rebel fighters.

The international alliance said it remained determined to keep pounding Gadhafi forces from the air, but would play no military role in the transition to democratic rule in oil-rich North African country once the erratic leader's 42-year rule was ended.

In Brussels, NATO Secretary-General Anders Fogh Rasmussen said Gadhafi's days in power were clearly numbered, making it imperative for the international community, the United Nations in particular, to gear up to help Libyans establish a new form of government.

"For Gadhafi, it is no longer a question of if he goes but when he goes," Fogh Rasmussen said at a meeting of the defense ministers from the 28 members of the North Atlantic military alliance.

"We do not see a lead role for NATO in Libya once this crisis is over," he said. "We see the United Nations playing a lead role in the post-Gadhafi, post-conflict scenario."

The alliance said it was acting in the skies over Libya purely in accordance with the U.N. mandate to protect the Libyan people from Gadhafi. The resolution did not include any involvement in post-conflict peacekeeping.

French Defense Minister Gerard Longuet said: "NATO has a military vocation and rebuilding Libya is a civilian issue.

So really simply, in order to rebuild Libya, if the Libyan people ask for it, because it is first of all an issue for the Libyan people, it is the job for civilian international institutions — and not military — to bring a response"

The Libyan rebels, too, have made it clear they have no appetite to see alliance ground forces in the country once the conflict is finished.

But they remain grateful for NATO intervention and applaud the stepped-up alliance bombing campaign, a record 66 strike sorties over Tripoli and environs on Tuesday.

"We've always felt that relentless, continuous strikes would hasten the departure of (Gadhafi) or at least the circle around him, said rebel spokesman Jalal el-Gallal in Benghazi, the de facto rebel capital.

"We're very glad that (NATO) is carrying out the actions, and it is a matter of time."

The cracks in the alliance also showed again Wednesday.U.S. officials said Defense Secretary Robert Gates pointedly prodded five allied nations to share more of the burden of the NATO-led air campaign against Libya.

None committed to do more.The officials said Gates used his final NATO meeting before retirement to press Germany and Poland to join the military intervention, and Spain, Turkey and the Netherlands to contribute to strike missions against ground targets.

The officials spoke on condition of anonymity to discuss the private meeting of the alliance's defense ministers.

Wednesday's shelling on the outskirts of Misrata represented escalation in the more than 4-month-old uprising, which has spiraled into a civil war that has divided Libyan into zones controlled by Moammar Gadhafi and others by rebels.

Dr. Khalid Abufalgha of Misrata's central Hikma hospital said government forces tried to enter the

city from three sides the east, south and west but rebel fighters kept them out.Gadhafi's forces then shelled the city from afar, killing 10 and injuring 24, he said.

All the dead were fighters manning rebel checkpoints outside the city, he said. Most were killed in the village of Tawargha, southeast of Misrata.

The daily death toll is the highest in Libya's third largest city since rebel fighters pushed government forces to the outskirts weeks ago.

Misrata remains under siege, able to get food and other supplies only through its seaport.

Misrata is the only large rebel-held city in western Libya. The rebels also control a swath of eastern Libya around Benghazi and other towns in the western Nafusa mountain range.

NATO airstrikes thundered down on the Libyan capital on Wednesday, at least four during the day after five before dawn.

It was not immediately clear what was targeted.

However, NATO strikes appear to be repeatedly pounding the same set of targets: the sprawling Gadhafi compound in central Tripoli, a series of government buildings and radar installations and military bases on the outskirts of the capital.

Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, said NATO remained determined to see the end of Gadhafi's rule.

During a visit to Cairo, he reminded reporters of NATO's decision over the weekend to extend the Libyan mission for 90 days, into late September.

"I think it's very clear that NATO is very committed to this mission and

committed to providing the kind of protection for the Libyan people that it has when it took the mission on and to focusing on a way to see Gadhafi out the door," he said.

He added that President Barack Obama "has been very clear and remains very clear that this will not involve boots on the ground from the United States perspective."

The pummeling NATO strikes of Tuesday and Wednesday made good on alliance warnings in recent days that attacks would be increasing the scope and intensity.

British and French attack helicopters struck for the first time inside Libya over the weekend.

Wing Commander Mike Bracken at NATO's Libya operations headquarters in Naples told The Associated Press there has been "increased tempo over recent days over Tripoli.”

The alliance seeks to further weaken Gadhafi's military.

But he stressed that "Gadhafi as an individual has not been a target and won't be a target."

Some 6,850 people, nearly all of them Libyans, have streamed across the border from Libya to Tunisia since Monday to flee the NATO raids as well as fighting between the rebels and government forces, according to the Tunisian Defense Ministry.

In Benghazi, Spanish Foreign Minister Trinidad Jimenez became the latest European official to visit and bolster the opposition forces.

OPEC oil talks collapse, no output deal

OPEC talks broke down in acrimony on Wednesday without an agreement to raise output after Saudi Arabia failed to convince the oil cartel to lift production.

"We were unable to reach an agreement this is one of the worst meetings we have ever had," said Ali al-Naimi, oil minister for Saudi Arabia, OPEC's biggest producer.

The failure to do a deal is a blow for consumer nations hoping the Organization of the Petroleum Exporting Countries would take action to stem fuel inflation.

It also underlines concerns about OPEC's willingness to help control prices, perhaps leaving the oil market more open to speculative attack.

"It is absolutely amazing," said Alirio Parra, Venezuela's former OPEC president. "This is not market leadership.Brent crude rose $1.30 a barrel to $118.08.

The United States had put pressure on Saudi to deliver a credible deal to cap crude prices and underpin faltering economic growth.

"We have noted with disappointment that OPEC members today were unable to agree on the need to make more oil available to the market," said the West's energy advisor the International Energy Agency.

POLITICS INTERVENE

Analysts said that while there were opposing views on whether markets required more crude, the backdrop to the disagreement revolved around political tensions in the Middle East and North Africa and differences over how to respond to consumer demands.

"One factor is a diverging market view. Another is politics," said analyst Samuel Ciszuk at IHS. "At times of heated politics/ideological debate, Saudi struggled to dominate as much as it could have given its size vis-a-vis others in OPEC.

Gulf Arab producer Qatar has given support to Libyan rebels fighting the government of Libya's Muammar Gaddafi. And Saudi Arabia has angered Shi'ite Iran by using force to support the Sunni Bahraini government in suppressing a Shi'ite rebellion.

Saudi's Naimi said OPEC's four Gulf Arab countries proposed the 12-member group increase output by 1.5 million barrels a day to 30.3 million barrels a day, including Iraq which is not bound by an OPEC quota.

But they were left isolated by a majority of seven Libya, Algeria, Angola, Ecuador, Venezuela, Iraq and Iran who wanted to keep production unchanged. Nigeria's position was not known.

Iran said the view of the majority was that supplies were adequate for the time being and that it had proposed delaying a decision on more oil by two or three months.

"Iran believes there is no shortage of supply," acting Oil minister Mohammad Aliabadi told Reuters.

"There is no request that we cannot meet, therefore there was no need to raise output and that was the opinion of many other OPEC members."

Easily OPEC's biggest producer, Saudi Arabia normally gets its way.

But this time those in OPEC politically opposed to the United States in particular Iran and Venezuela -- found enough support to block Riyadh.

"Saudi is the cartel member most interested in earning political "points' with consuming countries, and maintaining its image as a reliable supplier of last resort," said Katherine Spector at CIBC World Markets.

"Venezuela and Iran likely feel they have less to gain politically by

increasing quotas as a symbolic gesture." UNILATERAL SAUDIS

The only country with significant spare capacity, Saudi Arabia will now raise output unilaterally.

"This agreement means death to the existing quota system, an invitation for countries to do anything they want until the next OPEC meeting," said a senior Gulf delegate.

Earlier in the week a Gulf official said Saudi was already raising output in June to 9.5-9.7 million bpd.

Saudi output was last as high in the middle of 2008 after oil prices set a record $147 a barrel, shortly before recession sent prices crashing. Even OPEC's own forecasts suggest more oil is required to stop oil prices rising again.

OPEC's Vienna secretariat sees demand in the second half of the year 1.7 million bpd higher than current cartel output --in line with Saudi Arabia's proposals.

"Ongoing supply disruptions, as well as the fragile state of global economy, call for a prompt increase in supply on a competitive basis that will allow refiners to boost throughputs and meet rising seasonal demand," a statement from the IEA said.

OPEC has six months to cool off before it reconvenes. Iran offered to host a meeting in August or September but Gulf producers declined. The next scheduled meeting is on December 14 in Vienna.

Saudi economy set to grow by 6pc

Saudi Arabia's economy could grow around 6 percent this year rather than the 4.3 percent currently estimated thanks to a recently unveiled social spending package,

its central bank governor was quoted as saying on Wednesday.Worried by unrest sweeping the Arab world, the world's top oil exporter has pledged to spend an estimated $130 billion, or around 30 percent of its annual economic output, on new houses, creating jobs, unemployment benefit and other measures.

"The economic outlook is encouraging and very positive," Central Bank Governor Muhammad Al-Jasser said in a speech posted on the central bank's website.   

"The kingdom ... expects an average (growth) rate of 4.3 percent in 2011."    

"But the package of decisions ... to enhance the purchasing power of citizens and increase investment in housing and health may lead to higher growth estimates of around 6 percent," he said.

The International Monetary Fund (IMF) forecast the biggest Arab economy will expand by 7.5 percent in 2011, while analysts polled by Reuters in March expect it to grow 4.5 percent.

"The Saudi forecasts are fairly conservative, bearing in mind that they are thinking of increasing oil output as part of their OPEC agreement," said Gabriel Sterne, senior economist at Exotix in London.

Saudi Oil Minister Ali Al-Naimi said last week the country would lift production if there was demand for more crude. But the kingdom failed to convince fellow members of OPEC at talks in Vienna on Wednesday to lift production to help consumer nations struggling with high fuel costs.

Saudi Arabia relies on hydrocarbons for over 80 percent of budget revenue, and robust oil prices this year near $100 per barrel

for US light crude on Wednesday have been another spur to growth.

"From the point of view of nominal GDP, including the effects of oil prices, things could even look better," Sterne said.   

Saudi inflation reached 4.8 percent year-on-year in April, and analysts say demand will be boosted by the package of government handouts.