VIENNA, 12 September 2007 — OPEC countries have agreed to pump an extra 500,000 barrels of oil a day from the beginning of November, ministers said late yesterday.
Ministers said the organization’s output target would rise by 1.4 million barrels per day in total to 27.2 million bpd, from its current level of 25.8 million bpd.
But this represents a real increase of 500,000 barrels per day from current levels because OPEC was already producing 900,000 bpd more than its output target, ministers said.
Omar Farouk Ibrahim, spokesman for the Organization of Petroleum Exporting Countries, said the increase would be based on the group’s current production.
Ibrahim said OPEC agreed to “vigilantly monitor” fluctuations in the volatile global crude market. OPEC Secretary General Abdalla Salem El-Badri told reporters the move was based in part on the effects of the crisis in the US subprime mortgage market, where defaults have prompted lenders to tighten loan requirements.
That has sent ripples across all sectors of the economy, including the energy market, by raising fears of a US recession and reduced demand for oil and gasoline.
“We have seen the financial market and the subprime mortgage (crisis) putting some clouds on the horizon,” El-Badri said.
High oil prices also played into the decision, and OPEC wanted to send a message to consumers “that we care,” he said. But he declined to say what price range the organization would consider optimal.
Prices have been hovering around $76 a barrel, and light, sweet crude for October delivery rose a cent to $77.50 a barrel on the New York Mercantile Exchange after advancing above $78 immediately after news of OPEC’s decision was released. The contract alternated frequently between gains and losses. October gasoline fell 2.49 cents to $1.9537 a gallon.
In London, October Brent crude gained 23 cents to $75.71 a barrel on the ICE Futures exchange.
In other Nymex trading, heating oil futures fell 0.62 cent to $2.1654 a gallon and natural gas futures slipped 5.6 cents to $5.835 per 1,000 cubic feet.
The move by OPEC came as a surprise. Ahead of the meeting, key members of the group had said they were satisfied that crude supplies were ample.
However, some members — and numerous analysts — raised questions about whether OPEC would be able to meet expectations of a spike in demand for crude as winter approaches in the Northern Hemisphere.
OPEC provides about 40 percent of the global demand for crude.
Before the decision was announced, some ministers had been open about their unease at increasing production at a time when the outlook for global economic growth — which determines future demand for oil — is uncertain.
