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Updated from 11:20 a.m. EDT

Crude oil prices retreated Monday from a near 14-year high of almost $40 a barrel after Saudi Arabia's oil minister urged OPEC to increase supply.

The June futures contract for the benchmark U.S. crude was down 71 cents, or 1.8%, to $39.22, but well off session lows.

Prices fell sharply earlier in the day after Saudi Arabian Oil Minister Ali al-Naimi said OPEC, the organization of oil producing countries that sets production quotas and influences prices, should raise its production target by at least 1.5 million barrels per day, a bit more than 6%, from its current production rate of 23.5 million, when the organization of the world's largest oil producers meets on June 3.

"We ... do not want to see prices rise to the level that they negatively affect the growth of the international economy or the demand for oil," said Naimi in a prepared statement distributed from OPEC headquarters in Vienna. "It is apparent that demand, especially that of Asia, has and will continue to increase in the second half of this year."

That change would be largely cosmetic because OPEC's actual production has been estimated at 25.7 million barrels a day, said George Gaspar, an oil analyst at Robert W. Baird & Co. in Milwaukee.

"This does nothing but makes their current output more legitimate because it's already over," he said. "If you raise it by 1.5 billion barrels a day, that still suggests that they are 700,000 barrels a day beyond their production quota. But the fact that they made this statement wrinkled the price of crude this morning." Members of the cartel routinely produce more than allowed under respective official quotas.

He said with worldwide demand for oil growing dramatically, the Saudis are mindful of competition from non-OPEC suppliers, such as Mexico and Norway.

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"They think that $40 crude is going to short-circuit demand for their crude," he said. "I think what's happening is that realism is setting in here. Prices closed just pennies shy of that level last week, the highest since October 1990, after Iraq had invaded and occupied Kuwait.

While wholesale gasoline prices also declined, any drop at the pumps won't be as dramatic, if it happens at all. Gasoline futures ebbed to $1.32 a gallon, down a little more than 1 cent, or about 1%, from the previous close. Wholesale prices have climbed sharply since April 21, when they were at $1.13 a gallon on the New York Mercantile Exchange.

But Robert Sinclair, a spokesman for the Automobile Club of New York, said there's usually a three- to six-week lag between a drop on the exchange and prices at self-serve gas stations, unless prices are climbing. The average price of a gallon of unleaded gas is now $1.89, up 12 cents, or 6.4% from $1.77 a month ago. The average price is up 39 cents a gallon, or almost 21%, from the year-ago average of $1.50 a gallon, according to AAA.

"Often when prices go up there is an immediate effect at the pump," he said.

Crude prices repeatedly hit near 14-year highs last week on continuing Middle East security concerns, worries over gasoline shortages and a Department of Energy report that said U.S. crude inventories were lower than expected.

"We're still at a somewhat stratospheric level," Sinclair said.

He said efforts by OPEC might have some flattening effect on retail gas prices, which generally rise before the Memorial Day holiday weekend.

"The Saudis have demonstrated themselves to be most reasonable in the past on prices of crude," he said. "Even though they might reap short-term gains, they recognize the effect on the economies they sell crude to."

The benchmark European crude, Brent North Sea, hit a 14-year high on Friday, but was down $1.20 a barrel at $35.80 in London trading.