Oil superpower Saudi Arabia swiftly pledged to keep its crude supplies flowing smoothly to world markets after a deadly militant attack on the eastern oil city of Khobar.

But pledges of secure supplies from state-run oil giant Saudi Aramco might not go far enough to soothe jittery world markets, where prices again were threatening to pierce the $40 a barrel mark.

International markets have been on edge over the possibility of a militant strike in Saudi Arabia, the world's top oil exporter now pumping more than nine million barrels daily in a bid to cool scorching prices.

A purported statement from al-Qaeda boasting it had hit at "American companies" which "specialised in oil" and claiming the attack on Khobar that killed 17 foreigners will heighten dealers' concern about supply security in the Middle East.

"No Saudi Aramco facilities or personnel were affected by the incidents in al-Khobar on May 29th, 2004, and normal operations continue at all of the company's installations," state-run Saudi Aramco said in a statement.

"The company is committed to carrying out the Saudi Arabian government's policy of providing a reliable supply of oil to meet world energy demand."

Suspected al-Qaeda militants killed some hostages after Saudi commandos stormed a building yesterday to rescue some 50 foreigners in a Khobar housing compound. Hostage-taking is a new twist in the wave of militant violence sweeping the kingdom.

"The attack has some shock value for oil prices, but things may calm down again," said Mr Peter Gignoux, senior oil adviser at New York-based GDP Associates.

"This was a terrible act of terrorism, but it hasn't had any impact on Saudi oil production or exports."

Saudi oil officials met senior Western executives at Aramco headquarters in nearby Dhahran to ease concerns over security after the Khobar attacks, a Western industry source said.

The state oil company's "top priority is to ensure the security of its employees, dependants, facilities and communities, by working closely with Saudi government authorities", Aramco said.

The kingdom's well-protected energy infrastructure has yet to be struck by militants, but some dealers feared emboldened fighters might shift from soft targets and attack production and export facilities.

Khobar has no production, export or refining facilities, but Western oil firms have offices and housing in the city 400km northeast of the capital Riyadh.

Despite the fresh weekend violence, Western oil majors said they were unlikely to pull out of the oil-rich kingdom.

Executives from Royal Dutch/ Shell, Total and LUKOIL had lived at the Oasis compound, scene of the hostage ordeal. The three firms are working on projects to find and pump natural gas in the kingdom.

"I don't expect a mass exodus, but families will consider leaving," said a Western oil executive.

The Saturday attack in Khobar comes just days ahead of a meeting of the Organisation of Petroleum Exporting Countries (OPEC) in Beirut where the cartel is due to consider a big increase in output limits.

Saudi Arabia, the only OPEC member with any significant immediate spare capacity, has made clear it will pump real extra volumes of some 700,000 bpd, irrespective of quotas.