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OPEC boosts output of oil

The cartel will pump an additional 800,000 barrels a day, but it may be a while before prices are affected.

Faced with growing international pressure to drive down stubbornly high oil prices, the Organization of Petroleum Exporting Countries decided Sunday to increase its crude production by 800,000 barrels a day, spokesmen for the group and delegates said.

An official statement on the production increase will be issued today, the spokesmen said.

The members were scheduled to meet again today to confirm the increase and to discuss other issues in preparation for a meeting of OPEC heads of state in Caracas, Venezuela, this month.

Just days before this OPEC session, the price of crude oil reached its highest levels since the Persian Gulf War, before receding somewhat on Friday. OPEC members said they hope the 3 percent increase from its current daily production of 25.4-million barrels will gradually push oil prices below $30 a barrel _ it has been above $33 _ with most nations asserting that a favorable price would be between $22 and $28 a barrel.

Most of OPEC realizes that oil that costs more than $30 a barrel threatens to stunt worldwide economic growth, which, in turn, would cut into revenues member nations earn. But many oil industry experts in Vienna said that although the decision to increase its output signals OPEC's willingness to rein in prices, the increase is probably not enough to result in a significant fall in the cost of crude oil. They said it probably would bring prices down to about $30 a barrel.

"It's an important first step in dissipating the upward pressure on crude oil prices," said Michael Rothman, director of energy research for Merrill Lynch. "But we have to see if inventories in the U.S. increase down the line."

In Washington, the U.S. government gave Saudi Arabia credit for the OPEC production increase but said it is too early to know what effect it will have on the shortage in world oil inventories.

"Whether such an increase will stabilize the market remains to be seen," Energy Secretary Bill Richardson said. "Nonetheless, this expected production increase will bring needed additional oil into world markets."

Britain responded cautiously to the cartel's decision, making clear that the step would be of value only if the market reacts to bring prices down.

The cartel has raised production by nearly 3-million barrels since the beginning of the year, but the growing supply of oil has been quickly absorbed by the booming international economy, although demand has slackened slightly in the last few months as a result of high fuel prices.

Prices remain high in Europe, and there has been a wave of protests across the continent. While truckers and others who had imposed blockades across France gradually lifted them this weekend, protesters tied up traffic in the center of Brussels, Belgium, to protest the high fuel costs.

British truckers blocked several refineries and gas stations, causing nationwide shortages.

This latest increase by OPEC, which would probably go into effect Oct. 1, appears to be as much as the group could eke out. Most OPEC nations and countries allied with them, such as Mexico and Norway, are already producing crude at maximum capacity. Only Saudi Arabia and the United Arab Emirates are thought to have spare capacity to devote to increased production.

Obviously, not all the oil from the OPEC increase will be destined for the United States, and the first shipments of any new oil will probably arrive in early November. If supplies of crude oil and heating fuel in the United States remain low, the chances grow for price spikes and possible shortages of heating oil in the winter.

With such a scenario looming in an election year, the Clinton administration is considering releasing oil from the country's Strategic Petroleum Reserve to replenish commercial crude and heating oil reserves, industry experts said.

Gas prices up 6{ cents

CAMARILLO, Calif. _ High crude oil prices and tight supplies at U.S. refineries sent gasoline prices higher by more than 6{ cents a gallon over the past two weeks, according to a nationwide survey. The weighted average for all grades of gasoline was $1.62 a gallon _ 30 cents higher than it was a year ago, the Lundberg Survey reported Sunday.

_ Information from Associated Press was used in this report.

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