OPEC to raise output, prices fall

OPEC to raise output, prices fall
REUTERS & AFP

July 17: The OPEC group of leading oil producers is to increase output by 500,000 barrels per day from this month if price levels remain at current high levels, as appeared likely, a statement said today.

In London, the price of oil fell in response to the surprise announcement. The move would be taken under a mechanism agreed last month by which OPEC would increase production if prices remain persistently high, the statement said, quoting current OPEC president Ali Rodriguez.

Rodriguez, Venezuela's oil Minister, has "notified his colleagues that, in the event of prices remaining at current levels, they should be prepared to take the necessary steps to raise output. "Other things being equal, it is expected that this will happen before the end of the current month," it said.

The statement says that at their June meeting OPEC ministers agreed to a mechanism under which they would increase production by 500,000 barrels a day if the average price of the OPEC reference basket remained above a certain level of a specified period of time.

Oil prices immediately slumped on the London market, where the price of brent crude for September delivery fell 43 cents to 28.80 dollars a barrel. The surprise announcement came after Rodriguez dismissed calls by OPEC heavyweight Saudi Arabia last week for an emergency meeting in Vienna this week to discuss its proposal for a 500,000 barrel a day hike.

Rodriguez was on a tour of OPEC members designed to poll their views on the state of the market.