Top oil exporter Saudi Arabia has cut production by around 500,000 barrels per day (bpd), two Saudi-based industry sources said, from its output increase in March when it offset lost Libyan crude.

The kingdom produced 9-9.2 million bpd during at least part of March, a third industry source said.

'Saudi is now producing around 8.5 to 8.6 million bpd, and the reason for the drop is just slower market demand,' said a Saudi-based industry source.

The sources would not say when output was reduced. The kingdom told regular buyers in Europe and Asia on Monday it would keep contractual supply steady in May, but Saudi Arabia can still meet long-term supply contracts at the new production levels.

In addition to meeting long-term commitments, Saudi Arabia sold at least 2 million barrels of a special blend of crude oil it said was a substitute for prized, light sweet Libyan crude in March.

Industry sources have said more of the new crude would be available in April and May, depending on demand. Trader interest in the blend has been muted.

Oil prices have risen by more than 30 percent this year to more than $125 for Brent crude, their highest since July 2008, as a wave of unrest has disrupted output in Opec member Libya and heightened investor fears it could destabilise bigger producers.

However, members of the Organization of the Petroleum Exporting Countries have repeatedly said the oil market is well supplied and have blamed the price rise on speculation.

'If there are any signs in the market that more crude is needed, there will be no hesitation on Saudi Arabia's part in supplying that demand, but now demand is just a bit slower,' said another Saudi-based industry source. - Reuters