OPEC to increase production and drive prices down

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The Independent Online

OPEC members agreed Sunday to boost the group's official oil output by 800,000 barrels a day, two oil ministers in the petroleum producers cartel said.

OPEC members agreed Sunday to boost the group's official oil output by 800,000 barrels a day, two oil ministers in the petroleum producers cartel said.

The decision, reached after four hours of informal talks in Vienna, came amid mounting international pressure on OPEC to pump more oil to stem surging fuel prices.

The new quota will start on October 1. OPEC members agreed to meet again November 12 to reassess market conditions.

Algerian Oil Minister Chakib Khelil and Qatar Oil Minister Abdullah bin Hamad Al Attiyah confirmed the increase, which adds 800,000 barrels, or 3 percent, to OPEC's current official production of 25.4 million barrels a day.

The boost in production will provide no more than 100,000 fresh barrels of oil to world markets, analysts said. OPEC members already are producing at least 700,000 barrels above their current quotas.

The ministers began informal talks early Sunday ahead of a formal meeting scheduled later in the day.

High fuel costs have sparked concern and even outrage in several consuming nations. French truckers and taxi drivers last week blocked roads to protest gasoline prices, while farmers in Britain mounted similar, if smaller efforts to disrupt traffic. Americans living in areas where there is heavy snowfall worry that low fuel inventories will lead to soaring prices to heat their homes this winter.

On a diplomatic level, European finance ministers expressed concern that surging prices could crimp world economic growth, and they discussed taking the exceptional step of sending an envoy to the OPEC meeting in Vienna to ask for an increase in output.

Finance ministers from 21 Pacific Rim countries, meanwhile, had warned that rising oil prices could damage their economies. Officials attending the Asia-Pacific Economic Cooperation forum in Brunei issued a statement Sunday urging OPEC members to stabilize oil prices.

"Clearly, there's not enough oil ... contrary to what OPEC claims," said Roger Diwan, a managing director of The Petroleum Finance Company, a Washington-based consultancy.

Earlier, as they gathered for their meeting in Vienna, several OPEC ministers said they would agree to boost production as part of an earlier arrangement aimed at stabilizing prices between dlrs 22 and dlrs 28 a barrel.

OPEC members agreed in June to pump an additional 500,000 barrels a day if the average price for several types of OPEC crude exceeded dlrs 28 for 20 consecutive business days.

As of Thursday, this average OPEC price was dlrs 33.84 and had been higher than dlrs 28 a barrel for 19 consecutive days. Although Friday's OPEC price was not immediately available, prices for benchmark crudes in the United States and Europe ended the week well above that threshold.

Iran, Libya and other so-called price hawks in OPEC have resisted past efforts to raise the group's production target, which currently is 25.4 million barrels a day. However, an Iranian oil industry source speaking on condition of anonymity said Saturday that Iran would accept an increase of as much as 700,000 barrels a day.

Crude prices fell Friday in anticipation of an increase by OPEC, which produces about a third of the world's oil.

Futures contracts dropped dlrs 1.76 to dlrs 33.63 a barrel on the New York Mercantile Exchange, putting an end to a surge that had seen prices vault 30 percent since Aug. 1. In London on the International Petroleum Exchange, October Brent crude from the North Sea fell dlrs 1.77 to dlrs 32.78 a barrel.

OPEC has tried to blunt criticism for high prices by pointing out that many countries charge heavy taxes on gasoline and that refineries have been slow to process heating oil and other products.