OPEC ministers on Wednesday agreed to increase their ceiling for oil production to help bring down stubbornly high prices in a decision that traders and analysts dismissed as symbolic because the cartel already is pumping more than its new target.
In a meeting at its headquarters here, the Organization of the Petroleum Exporting Countries set a ceiling of 27 million barrels a day effective in November, an increase of 1 million barrels.
The decision will not affect how many barrels of oil the cartel's member countries actually produce. OPEC's 11 members are pumping about 30 million barrels a day in an effort to keep prices down, officials said.
OPEC's president, Purnomo Yusgiantoro, said he hoped that increasing the ceiling would have a psychological impact on the market, helping calm worries about supply. "What we would like to see is the prices down," Yusgiantoro, the minister of energy and mineral resources for Indonesia, said at a news conference after the meeting.
The price of oil fell on the New York Mercantile Exchange but analysts said the decision by OPEC was not the reason. They cited profit-taking and the expectation of only a short-term disruption to the oil sector from Hurricane Ivan. The price for U.S. benchmark crude oil for October delivery fell 81 cents Wednesday, to $43.58 a barrel.
With OPEC's member countries producing near their capacity, traders are concerned that any significant disruption to production -- in Iraq or other oil-producing countries -- could be problematic.
OPEC, which is responsible for more than one-third of the world's oil production, is pumping oil at its highest level in 25 years. OPEC officials said that they have the ability to pump as many as 1.5 million barrels more a day and that some of its member countries, including Saudi Arabia, will add more capacity soon.
Analysts said the cartel's action Wednesday means little because its members are producing so close to their limit.
"They're trying to get headlines like the old lion that lost its claws," said Philip J. Flynn, vice president of Alaron Trading Corp. in Chicago. "They've lost the ability to bring down prices. They don't have claws anymore."
Raad Alkadiri, an analyst with PFC Energy in Washington, said the market is not being driven by factors under the cartel's control. "It's not in their hands," he said.
Analyst William R. Edwards, head of Edwards Energy Consultants in Katy, Tex., said some OPEC ministers incorrectly believe that by looking like they exert control, they are able to calm markets.
"They like to think they have more control than they actually exercise," Edwards said.
The oil ministers want lower prices because of concern that the cost of crude could ultimately curtail world economies, lead to less oil consumption and hurt OPEC members.
In a statement released after OPEC's closed meetings on Wednesday, the cartel blamed high prices on larger-than-expected demand in China and the United States, geopolitical tensions and concerns that spare capacity may not be able to make up for demand disruptions. Yusgiantoro said that those factors were not under OPEC's control and had driven up the price of crude by about $10 to $15 per barrel.
OPEC's research director, Adnan Shihab-Eldin, said he expected prices to drop when geopolitical concerns subside.
Ministers from OPEC were customarily tight-lipped on Wednesday. During a brief press availability, dozens of reporters packed into OPEC's crammed meeting room as ministers offered only brief and vague answers to their questions. They made similarly terse comments earlier in the morning between meetings.
Several ministers said that there was more than enough oil available to keep up with demand and that OPEC did not need to produce more.
"There is already oversupply of the market," said Edmund Maduabebe Daukoru, Nigeria's presidential adviser on petroleum and energy.
At an earlier meeting in Beirut, OPEC made a similar decision to increase its production ceiling. That increase was phased in, taking effect in July and August.
The new production ceiling excludes Iraq, where oil flow repeatedly has been slowed by fighting. Even excluding Iraqi output, OPEC is producing more than its new target.
OPEC officials said they were considering increasing their price band for oil and would take up the issue at a meeting in December. The price band is the cartel's preferred selling price but is not used to set what member countries charge buyers. OPEC considers increasing production if prices are above the band for too long and decreasing production if prices remain below the range. But prices have been above the band for some time without formal decisions to increase production.