The Organization of Petroleum Exporting Countries has agreed to boost oil production by another 500,000 b/d, effective Oct. 31, in a further effort to ease high oil prices.
While crude oil futures prices fell in response to the call Oct. 30 by OPEC Pres. Alí Rodríguez Araque to members to boost output, the slide was held to less than $1. Market analysts cited skepticism over the group's ability to further hike production, while they also kept a wary eye on the volatile Palestinian-Israe* crisis.
Rodríguez last week wrote to fellow oil ministers suggesting that "steps be taken" to raise OPEC's collective output, by a further 500,000 b/d starting Oct. 31.
This represents the fourth time this year that OPEC has raised output quotas in a bid to bring prices below $28/bbl-although the first occasion when a production increase has been triggered by OPEC's price-band mechanism. Using this device, which members agreed to in March, OPEC members agreed to raise production if the price of a basket of OPEC crudes traded above $28/bbl for 20 days in a row. On Oct. 27, the basket price averaged $30.91, the 20th day above $28.
In total, OPEC has pumped an extra 3.7 million b/d onto world crude markets this year. Including the latest increase, its production ceiling stands at 26.7 million b/d.
Meanwhile, Mexico, not a member of OPEC, also disclosed plans to increase output. Mexico's Energy Ministry said last week the country will boost production by 100,000 b/d in December and another 200,000 b/d by April 2001.
The next OPEC ministerial meeting is slated for Nov. 12 in Vienna.
