May 18 (Bloomberg) -- Saudi Arabia's decision to increase oil production in June will not help lower the price of crude, Iraqi Oil Minister Hussain al-Shahristani said.

The oil market is ``well supplied,'' and prices are being driven by ``speculative flows'' and not supply and demand, Shahristani said today in an interview in Sharm el-Sheikh, Egypt, at the annual World Economic Forum.

``Everyone is pumping as much as they can at the moment,'' he said. ``Iraq has added 500,000 barrels over the last six months and it has made no difference.''

Saudi Arabia, the world's largest oil exporter and the most influential member of the Organization of Petroleum Exporting Countries, said it will increase oil output by 300,000 barrels a day following requests by clients and U.S. President George W. Bush. The Saudi decision had little impact on oil prices, which closed that day at a record $126.29 a barrel in New York after reaching $127.82 during the day, the highest since trading began in 1983.

The Saudi response is ``not enough'' to address U.S. energy needs, Bush told reporters yesterday in Sharm el-Sheikh.

Oil prices have doubled in the past year on surging demand, supply disruptions in places such as Nigeria and commodity purchases by investors as a hedge against the declining U.S. dollar. The price surge threatens to accelerate inflation and curb global economic growth.

Qatari Oil Minister Abdullah al-Attiyah said in a telephone interview at the time of Bush's visit to Saudi Arabia that there was no need for more oil production or a meeting of OPEC members before the organization's next scheduled conference in September.

OPEC, which pumps more than 40 percent of the world's oil, has kept output targets unchanged during its past three meetings, on March 5, Feb. 1 and Dec. 5.