The OPEC oil-producing cartel announced Monday it would raise output by 500,000 barrels per day with immediate effect, in a bid to ease persistently high prices.
Organisation of Petroleum Exporting Countries president Ali Rodriguez, Venezuela's oil minister, wrote to fellow OPEC ministers asking them to implement the output increase from Tuesday, said an OPEC statement.
"I am writing to your excellency to ask you to take the necessary steps to raise your esteemed country's output" from October 31, he said, noting that it was triggered by a price-band mechanism agreed in March.
The statement from OPEC's Vienna headquarters noted media reports that "some member countries indicate that steps are already being taken to implement the increase from midnight today."
Markets had widely anticipated the announcement, with prices falling at the end of last week in response.
The price of Brench crude for December delivery edged down in London on Monday, after confirmation from OPEC's own news agency that Rodriguez was planning to announce the hike during the day.
OPEC has already boosted production three times over the past 12 months in an attempt to rein in prices that have spiked to 10-year highs above $35 a barrel on a thirsty market.
Although the market had already largely priced in the production increase, traders were eagerly awaiting confirmation and further details of the increase.
OPEC oil ministers are due to meet in Vienna on November 12, and had indicated that they would wait until then to decide on any new increase.
But analysts had increasingly speculated that a production increase would be agreed earlier, under the price-band mechanism, because of persistently high prices.
The organization is divided between countries like heavyweight Saudi Arabia, which have spare capacity and are keen to increase production, and others who fear that too big an increase could spark a dramatic slump in prices.
The price-band mechanism, agreed in March, allows for an automatic 500,000 barrels per day increase if the price of OPEC's reference basket strays outside a range of $22-28 for 20 consecutive days.
The 20th day was reached Friday, but for OPEC purposes Monday was the first day it could in theory be triggered.—AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com)