Opec boosts oil production

Driven by fears of a heavy winter demand at the end of the year, Opec oil ministers agreed today to immediately pump an extra half-million barrels of oil a day and to approve a similar boost later if prices do not fall.

The decision to look to winter and raise the production quota just ahead of the northern hemisphere spring – when demand normally falls – was unusual.

It reflected concern about the oil cartel’s ability to influence a stubbornly bullish market that has driven prices of benchmark light crude up about 25% this year alone.

Edmund Dakouru, a Nigerian oil official, said “the extra oil will go a long way” toward meeting any concerns about winter supply.

But others at the meeting in Isfahan, the Iranian oil capital, suggested the decision was symbolic and would not result in fresh oil on the market, due to quota-busting by members already amounting to about 700,000 barrels a day.

“We’re already all over quota,” Algerian Oil Minister Chakib Khelil said.

The decision to boost output will officially raise the group’s ceiling to an all-time high of 27.5 million barrels a day.

But with Iraq – which is exempt from Opec quotas while rebuilding – and quota-busting factored in, Opec is already producing close to 29.5 million barrels.

In an attempt to ease winter worries, Opec’s president, Kuwaiti Oil Minister Sheik Ahmed Fahd Al Ahmed Al Sabah, said that at full capacity – and including Iraq – the oil-producer group could pump some 31 million barrels a day.

That would represent a daily increase of about 1.5 million barrels from present levels.

The decision appeared to leave the market unimpressed, in stark contrast to past years when Opec decisions to bolster output usually led to significant falls in crude’s value.