The OPEC cartel set its members free today to increase oil output to meet shortages created by the Persian Gulf crisis, which has taken 4 million barrels off world markets each day.
Industry sources said Saudi Arabia, the world’s biggest exporter, was among those already freeing up the taps.
A statement agreed to by a majority of the 13 oil ministers of the Organization of Petroleum Exporting Countries said OPEC “stands for market stability and regular supply of oil.”
Its Market Monitoring Committee decided that “OPEC shall consequently increase production, in accordance with need.”
This frees heavyweight producers Saudi Arabia and Venezuela, among others, to increase production and help see that the United Nations’ embargo on oil from Iraq and Iraqi-held Kuwait does not create shortages, send prices sky-high and endanger the global economy.
Western oil executives believe the accord might eventually make 3 million to 3.5 million extra barrels available daily.
Iraq, as expected, did not send its minister to the talks in Vienna. Nor did Libya, its closest OPEC ally and a traditional advocate of high prices.
A third pricing hawk, Iran, had reservations. Its minister, Gholamreza Aghazadeh, disputed the legality of an accord in the form of an agreed-upon press release with no signatures.
Aghazadeh said OPEC should wait before raising production to make sure the West starts to use its huge stocks of petroleum to help stabilize markets.
The majority decision sent prices sharply lower on world markets, where jitters about the possibility of war in the gulf had recently pushed prices above $32 a barrel.
West Texas Intermediate for October delivery, the U.S. benchmark crude, was down a steep $1.93 at $25.95 a barrel at 1 p.m. after trading as low as $25.60. New York unleaded gasoline was down 3.33 cents at 85.20 cents a gallon for September delivery.
North Sea Brent Blend, a main international benchmark, was down $1.05 at $25 a barrel for October delivery.