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Oil prices rise on Mexico attacks Opec discusses rise in oil output
(about 6 hours later)
Oil prices have surged to near record highs after a series of attacks on energy facilities in Mexico, the world's fifth largest crude exporter. Oil prices steadied in afternoon trade in Europe as Opec members discussed the possibility of a small rise in output.
Following the Mexican attacks, which have been blamed on a left-wing rebel group, US light was up 37 cents at $77.86 a barrel in early Tuesday trade. The 12-nation oil producers' cartel is debating a proposal from key member Saudi Arabia to raise daily production by 1.7% at their meeting in Vienna.
London's Brent crude also advanced, gaining 28 cents to $75.76 a barrel. US light crude fell from morning highs of $77.86 a barrel to $77.51, two cents up on Monday. In London, Brent crude was 13 cents down on the day at $75.35.
The rises come as oil producers' cartel Opec is meeting in Vienna. Opec is expected to keep its output on hold. Earlier price rises had been caused by a series of attacks in Mexico.
'No consensus'
Opec ministers speaking during breaks in the ongoing meeting, said members were divided on Saudi Arabia's proposal.
"Everything is on the table, but there is no consensus," said Venezuelan Energy Minister Rafael Ramirez, who opposes any increase.
Until Tuesday, Opec ministers had insisted there would be no increase in supplies.
This was despite warnings from the International Energy Agency, which represents the world's top 26 oil consuming nations, that additional supplies will be needed to meet demand.
Economists have also suggested that an increase in Opec supplies, and the likely result that prices will fall, would help ease recent US economic and global stock market jitters.
Over the past year, Opec - which supplies more than a third of the world's oil - has cut deliveries by about 6%.
US light crude hit a record high of $78.77 a barrel on 1 August.US light crude hit a record high of $78.77 a barrel on 1 August.
'Long-term problem' 'People's war'
Mexican officials have insisted that the dozen or so attacks will not hit the country's oil output, but have cut off a quarter of its natural gas flow. The dozen or so attacks on Mexico oil and gas facilities - which pushed crude prices to near record highs - have been blamed on a left-wing rebel group.
Oil analyst Jim Ritterbusch, president of Ritterbusch & Associates, said that the situation in Mexico "could potentially pose a longer-term problem", which is why prices reacted so strongly. Mexican officials have insisted that although the country's gas output had been cut by a quarter, oil exports would not be affected.
Opec controls more than a third of global oil supplies
The attacks were claimed by the People's Revolutionary Army, as part of what it says is a "prolonged people's war" against "the anti-people government".The attacks were claimed by the People's Revolutionary Army, as part of what it says is a "prolonged people's war" against "the anti-people government".
Experts say it is a very secretive but also very small grouping.Experts say it is a very secretive but also very small grouping.
Demand dispute
Opec's expected decision not to boost output comes despite calls from the International Energy Agency (IEA), which represents the world's top 26 oil consuming nations, that additional supplies will be needed to meet demand.
Economists have also suggested that an increase in Opec supplies, and the likely result that prices will fall, would help ease recent US economic and global stock market jitters.
Opec members counter that current supplies are sufficient.
Over the past year, Opec - which supplies more than a third of the world's oil - has cut deliveries by about 6%.
Its 12 member nations include Saudi Arabia, Iraq, Iran, Nigeria and Venezuela. Mexico is not a member.