The minister, who assumed office in March, also told Al-Qabas daily in an interview that the two production cuts made since March by Opec and non-Opec oil producers will probably need to be extended to shore up the oil price which is at its lowest level in a decade.

"The current inclination to face the drop in oil prices is to cut production and this should continue," Sheikh Saud said. "Any view to raise production is a big mistake." Kuwait's daily Opec quota was raised to 2.19 million barrels as of January 1 from two million when Opec agreed at a meeting in November in Jakarta to raise the overall ceiling by about 10 percent to 27.5 million bpd.

But after the two rounds of cuts, Kuwait's quota has dropped to 1.98 million bpd. Since March, OPEC has been forced to cut 2.6 million bpd from the ceilingset last November. Sheikh Saud said that by raising the ceiling, at a time that demand was hit by mild weather and the Financial crisis in Asia, Opec merely legitimised those countries violating their quotas. "One of the biggest mistakes...was the Jakarta agreement to raise production...thus legalising violations and the violating countries further violated (their quotas)," said the Minister who is seen by some analysts as a price hawk.

In contrast to previous Kuwait oil ministers who have fought for a higher production level for their country, Sheikh Saud has often argued that a higher oil price is more important. In his newspaper interview, the oil minister said that given the high level of oil in storage -- which he estimated at six billion barrels - "the world could do without OPEC's oil for a long period".

Opec's daily crude oil production in June was about 27.95 million, according to the International Energy Agency (IEA) which also said that industry-held oil stocks in the world's industrialisednations hit an all-time record at the end of May. Bellwether Brent blend August futures closed 14 cents down in London on Friday at $12.89 a barrel -- a fall of nearly 70 cents on the week and more than $6 below average 1997 prices.

Sheikh Saud said the average price for Kuwaiti crudes has risen in recent weeks to around $10 a barrel from an earlier $7 a barrel compared with budget estimates of $13 a barrel for the fiscal year which ended on June 30. Oil revenue in the current 1998/99 draft budget was based on a $12 barrel. He said Kuwaitis do not realise the extent of economic hardship their tiny Gulf Arab state was facing, adding that to wipe out a 1.596 billion dinar ($5.196 billion) deficit in the current 4.41 billion dinar budget, Kuwaiti crudes would have to rise to above $18 a barrel.

"What is astonishing is that we are a nation of 700,000(Kuwaitis) and with all our brothers (foreign residents) we become two million people, so do we need a four billion dinar budget? By God I do not understand thesituation," added Sheikh Saud, a former information Minister and ambassador. Kuwaitis enjoy many benefits in the cradle-to-grave welfare state which provides most basic services either free or heavily subsidised.