Saudi Arabia persuaded OPEC to raise oil output by 500,000 barrels per day on Tuesday in a gesture to consumer nations worried by the economic impact of $77 oil and rapidly diminishing fuel stocks.
After seven hours of talks, OPEC officials announced the hard-won deal, effective November 1. Before the meeting Libya, Algeria and Venezuela were inclined to resist the proposal put forward by Saudi Arabia and its Gulf Arab neighbors.
"We think the market is a little bit tight so we are responding positively. We are also taking into consideration, as OPEC, the concern of the consumers," acting Kuwaiti Oil Minister Mohammad al-Olaim told reporters.
"Our message to the consumer is that we care and that is why we have raised our production by 500,000 bpd," OPEC Secretary-General Abdullah al-Badri told a news conference.
U.S. crude oil was down seven cents at $77.42 after the deal but still within sight of its record high of $78.77 a barrel.
"Given the global credit crunch and the number one consumer on the economic ropes, OPEC's decision is symbolic," said Christopher Jarvis, analyst at Caprock Risk Management.
OPEC's move followed months of calls for more oil from top consumer the United States and the International Energy Agency (IEA) that represents the interests of 26 industrialized nations.
"It's the responsible thing for OPEC to do given the market needs more oil with the higher seasonal requirements ahead," said Gary Ross, CEO at PIRA Energy Consultancy.
The increase comes on top of current OPEC supplies and takes the output target for the 10 members bound by the agreement -- Iraq and new member Angola stand outside -- to 27.2 million bpd.
(Reuters)