OPEC agrees to boost oil production

VIENNA, Austria -- OPEC members agreed Sunday to boost the cartel's oil production target by 6.5 percent to stabilize a world market jittery over a crisis in Venezuela and the possibility of war in Iraq.\nThe increase of 1.5 million barrels a day -- to 24.5 million barrels -- would take effect Feb. 1, OPEC President Abdullah bin Hamad Al Attiyah told a news conference at the group's headquarters in Vienna.\nAl Attiyah confirmed that the Organization of Petroleum Exporting Countries wants to keep prices of its benchmark blend of crudes at $22-$28 per barrel. Friday prices hovered around $30.\nEarlier in the day, Saudi Arabian Oil Minister Ali Naimi said the ceiling should remain at 23 million barrels. Saudi Arabia is OPEC's most influential member and has the bulk of the cartel's spare production capacity.\nOPEC said it wanted to calm fears of a supply crunch caused by an ongoing strike in Venezuela. The agreed output hike was near the upper end of what analysts expected.\nThe strike, launched Dec. 2 by political opponents seeking to oust President Hugo Chavez, has slashed Venezuela's exports by about 2 million barrels a day. Venezuela normally is OPEC's third-largest producer and a major oil supplier to the United States.\n"OPEC is trying to send a very strong message that it will do its utmost to stabilize demand and supply," Al Attiyah said after delegates reached their decision in informal talks.\n"Now we will wait for the market to react."\nThe United States praised the move, saying the hike would support economic growth and stability.\n"It's a global oil market and the more oil on the market the better for all," U.S. Energy Department spokeswoman Jeanne Lopatto said Sunday. "Instability in the oil market hurts producing and consuming countries alike."\nHowever, Al Attiyah said the arrangement would be only temporary. When Venezuela resumes its normal level of exports, the group's members will meet again to reassess its production target, he said.\nIt appeared the actual increase in output would be somewhat smaller than 1.5 million barrels a day, as Venezuela is unable now to use its higher quota.\nThe suddenness of OPEC's decision to call the meeting reflects its surprise at the deterioration in market conditions. Oil ministers for four of the group's 11 members could not make it because of prior commitments.\nA fifth minister, Libya's Abdulhafid Mahmoud Zlitni, was due to arrive Sunday but canceled his trip because a sandstorm prevented his plane from leaving the Libyan capital, Tripoli.\nCrude prices surged in recent weeks but then fell sharply in anticipation of OPEC's boosting production. Fears about a possible U.S.-led war against Iraq have put upward pressure on world prices.\nAl Attiyah insisted that OPEC had not been pressured by the United States or other importers to approve a large increase in production.\nOPEC's new production ceiling will be shared among 10 members, but not Iraq. Although it is the 11th member, Iraq does not participate in the group's production agreements because the United Nations oversees its exports under sanctions dating to the 1991 Persian Gulf War.\nOPEC pumps about a third of the world's crude supplies, which total 79 million barrels a day.\nVenezuela resisted the Saudi plan for fear of losing market share to OPEC partners that have spare capacity, said Ali Rodriguez, head of the state-run Venezuelan oil company Petroleos de Venezuela S.A.\nRodriguez, speaking at a separate news conference, said his company aimed to increase its production by February to 2.5 million barrels a day from its current, constrained level of 700,000 barrels. Other delegates expressed doubt that Venezuela could restore output so quickly.\nThe main message for the oil market is that "there will be more barrels," said Yasser Elguindi of Medley Global Advisers, a New York consultancy.\nBut, "I think this is a very confusing and difficult message, and it will take a while for the market to work out the logistics of it," Elguindi added.\nIraq has the second-biggest oil reserves after Saudi Arabia, and there has been a steady buildup of U.S. troops in the Persian Gulf.\nOn the New York Mercantile Exchange, February contracts of light, sweet crude futures fell 31 cents Friday to close at $31.68. On London's International Petroleum Exchange, February Brent crude ended at $29.67 a barrel, up 3 cents.\nOPEC announced its final decision at a hurriedly called news conference after canceling plans for a formal meeting.