Riyadh, Saudi Arabia ? In a significant shift, Saudi Arabia’s oil minister said Monday that crude prices had risen far enough, and he would urge OPEC to increase production, reversing an output cut that began just last month.

The change in policy, Oil Minister Ali Naimi said, is due to concern that high prices could hurt the world economy and reduce demand for oil. Oil prices have risen steadily in recent weeks, with U.S. crude prices touching $40 a barrel Friday.

“It is certain that the kingdom believes that increasing the OPEC production ceiling is essential to keep supply and demand balanced,” Naimi said in a statement.

He said the increase, which he planned to propose at a June 3 meeting of the Organization of Petroleum Exporting Countries, should “not be less than 1.5 million barrels a day.”

That would more than offset the 1 million barrel-a-day cut in OPEC’s production target that went into effect April 1. However, a boost in the production ceiling might have little real effect, analysts said, as most OPEC countries are producing well more than their quotas.

OPEC pumps about a third of the world’s oil, and Saudi Arabia is its biggest producer and de facto leader.

Crude oil prices briefly plunged after the announcement. Contracts of U.S. light, sweet crude for June delivery fell by $1.65 a barrel on the New York Mercantile Exchange before recovering to $39.45, down 48 cents. June contracts of Brent crude tumbled by $1.67 a barrel on the International Petroleum Exchange in London but rebounded somewhat and were 70 cents lower at $36.30 in late trading.

The change in Saudi oil policy came only weeks after Washington Post journalist Bob Woodward said in a new book that Saudi Arabia had made a deal with the White House to increase oil production to drive down U.S. gasoline prices and help President Bush win re-election. Saudi and U.S. officials denied the report.