OPEC agrees to pump more oil
OPEC agreed today to increase production by a small amount -- about another half-million barrels a day. Cartel members said they're worried about the U.S. mortgage mess. Stephen Beard reports.
Qatari Oil Minister Abdullah bin Hamad al-Attiyah speaks to the press during a break in the meeting of OPEC ministers at the cartel's headquarters in Vienna today. (Dieter Nagl, AFP/Getty Images)
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KAI RYSSDAL: Here's yet another verification that there's no basis in actual fact for oil prices. Crude closed at a record high today in New York: $78.23 a barrel. Even though OPEC agreed this afternoon to increase production. Not a whole lot, to be sure. About another half-million barrels a day. And you're gonna love this. Cartel members said they're worried about the U.S. mortgage mess. From London, Marketplace's Stephen Beard reports.
STEPHEN BEARD: The decision is a surprise. Pundits were confidently predicting that OPEC would keep output at current levels. But suddenly things have changed. Now key members of the cartel seem to be fretting about America's subprime mortgage crisis. The fear is that it's seriously weakened the U.S. economy. And a much higher price of oil could tip the U.S. into recession.
Edward McBride of the Economist magazine:
Edward McBride: The more moderate countries, most prominently Saudi Arabia, have decided that if they do not increase the supply of oil available on the world markets that the oil price would have gone beyond $80 a barrel. And that would not have been good for anyone in the long run.
And certainly not for OPEC. If the U.S., the world's biggest single consumer of oil, falls into recession, the price of crude could plummet. Today the cartel's secretary general spoke of OPEC's concern for the consumer. He said "we want to send a message that we care."
In London, this is Stephen Beard for Marketplace.
