OPEC To Boost Crude Oil Output

OPEC agreed late Tuesday to boost its crude output by 500,000 barrels a day starting Nov. 1, in an effort to calm jittery markets worried that supplies could grow tight by the end of the year.

Omar Farouk Ibrahim, spokesman for the Organization of Petroleum Exporting Countries, said the increase would be based on the group's current production, meaning the 12-nation cartel was adding actual oil to the market.

Ibrahim said OPEC agreed to "vigilantly monitor" fluctuations in the volatile global crude market.

OPEC Secretary General Abdalla Salem El-Badri told reporters the move was based in part on the effects of the crisis in the U.S. subprime mortgage market, where defaults have prompted lenders to tighten loan requirements.

That has sent ripples across all sectors of the economy, including the energy market, by raising fears of a U.S. recession and reduced demand for oil and gasoline.

"We have seen the financial market and the subprime mortgage (crisis) putting some clouds on the horizon," El-Badri said.

High oil prices also played into the decision, and OPEC wanted to send a message to consumers "that we care," he said. But he declined to say what price range the cartel would consider optimal.

Prices have been hovering around $76 a barrel, and after OPEC's announcement light, sweet crude for October delivery rose a cent to $77.50 a barrel on the New York Mercantile Exchange after earlier rising above $78. In London, October Brent crude gained 12 cents to $75.60 a barrel on the ICE Futures exchange.

Tuesday's move by OPEC came as a surprise. Ahead of the meeting, key members of the group had said they were satisfied that crude supplies were ample.

However, some members, and numerous analysts, raised questions about whether OPEC would be able to meet expectations of a spike in demand for crude as winter approaches in the Northern Hemisphere.

OPEC provides about 40 percent of the global demand for crude.