OPEC TO BOOST OIL PRODUCTION
VIENNA, Austria (AP) -- OPEC members agreed Sunday to boost the cartel's oil production target by 6.5 percent to cover a shortfall in crude exports from Venezuela.
The increase of 1.5 million barrels a day would take effect on Feb. 1, OPEC President Abdullah bin Hamad Al Attiyah told a news conference.
The Organization of Petroleum Exporting Countries announced the increase in the hope of calming fears of a supply crunch caused by an ongoing strike in Venezuela. The strike, launched Dec. 2 by political opponents seeking to oust President Hugo Chavez, has slashed the country's exports by about 2 million barrels a day. Venezuela, a major supplier to the United States, is normally the world's fifth-largest oil producer and the third largest in OPEC.
"OPEC is trying to send a very strong message that it will do its utmost to stabilize demand and supply," Al Attiyah said after delegates reached their decision in informal talks.
"Now we will wait for the market to react," he said.
OPEC's new production ceiling is 24.5 million barrels a day. The group would review its decision when it meets again in March, Al Attiyah said.
OPEC pumps about a third of the world's crude supplies, which total 79 million barrels a day.
The output hike was at the upper end of what analysts had expected. It appeared to contradict Saudi Arabian Oil Minister Ali Naimi's comment earlier in the day that the ceiling should remain at 23 million barrels a day. Saudi Arabia is OPEC's most influential member, and it has the bulk of the cartel's spare production capacity.
Crude prices surged in recent weeks but fell sharply in anticipation of OPEC's boosting production. Fears about a possible U.S.-led war against Iraq have added upward pressure to world oil prices. Iraq has the second-biggest oil reserves after Saudi Arabia, and there has been a steady buildup of U.S. troops in the Persian Gulf.
On the New York Mercantile Exchange, February contracts of light, sweet crude futures fell 31 cents Friday to close at $31.68. On London's International Petroleum Exchange, February Brent crude ended at $29.67 a barrel, up 3 cents.
Al Attiyah confirmed that OPEC's price target remains $22 -$28 per barrel of its benchmark blend of crudes.
The suddenness of OPEC's decision to call this meeting reflects its surprise at the deterioration in market conditions. Oil ministers for four of the group's 11 members were unable attend due to prior commitments.
A fifth minister, Libya's Abdulhafid Mahmoud Zlitni, was due to arrive Sunday but canceled his trip because a sandstorm prevented his plane from leaving the Libyan capital, Tripoli.