OPEC to boost output by 1 million barrels by Nov. 1

Cartel makes goodwill gesture to head off rising global crude oil prices

The Associated Press

OPEC will increase its production of oil by 1 million barrels a day starting in November as the cartel moves to head off rising oil prices.

Kuwaiti Oil Minister Sheik Ahmad Fahad al-Ahmad al-Sabah said the cartel agreed to the decision to raise output by nearly 4 percent, adding it would take effect Nov. 1.

“We will give a signal to the market that we are working hard for the stability of the market,” he said.

The decision will increase OPEC’s self-imposed output limit for all its members, except Iraq, from 26 million barrels a day to 27 million barrels, but the cartel is already producing 27.4 million barrels.

“It’s a gesture of goodwill,” Algerian Oil Minister Chakib Khelil told The Associated Press.

OPEC’s current price band is US$22 to US$28.

A proposal by the cartel’s board of governors to increase the price band will be made at a meeting Dec. 6 in Cairo, Egypt.

Saudi Oil Minister Ali Naimi reiterated that prices for oil remained too high in the wake of voracious demand by China and the United States.

Some OPEC members want the band increased, including Libyan Oil Minister Fathi bin Shatwan.

OPEC’s current band is US$22 to US$28 a barrel. Shatwan said he wants that range to increase to US$28 to US$35 a barrel.

“It is a good impression to the consumer,” Shatwan said of the decision to increase output.

Nigeria’s OPEC representative, Edmund Dakoru, said he wanted the price band raised to US$30 to US$40.

World demand for oil has been voracious, led in part by China’s expanding economy and continued demand in the United States.

But analysts said the global supply cushion is thin because OPEC vastly underestimated the growth of demand this year. Now it seems the group lacks the ability to increase production quickly enough to bring prices down.

Oil prices have soared in recent months because of the extremely thin margin of spare output capacity worldwide and fears of supply disruptions around the globe.

OPEC will meet with energy industry leaders, including oil companies and agencies, Sept. 16 and 17.