Minister of State for Energy Henry Odein Ajumogobia from Nigeria arrives for a news conference at the OPEC's headquarters in Viennna, on Monday. Oil ministers of the Organisation of Petroleum Exporting countries, OPEC, met in Vienna on Tuesday. - AP

AP:

OPEC agreed late Tues-day to boost its crude output by 500,000 barrels a day in an effort to calm markets roiled by high oil prices and worried that supplies could grow tight by the end of the year.

The surprise move would take effect November 1, the cartel said as members met in Vienna, Austria.

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

Fluctuations

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 gasolene.

"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

Prices have been hovering around US$76 a barrel, and after OPEC's announcement light, sweet crude for October delivery fell 29 cents to US$77.20 a barrel on the New York Mercantile Exchange after earlier rising above US$78.

In London, October Brent crude gained 18 cents to US$75.66 a barrel on the ICE Futures exchange.

"It's a very positive gesture," said John Hall, an analyst with John Hall Associates in London. "The fact that they're actually adding oil is very, very positive."

Tuesday's move by OPEC took analysts off guard. Ahead of the meeting, key members of the group had said they were satisfied that crude supplies were ample.