An agreement to increase oil production by the world’s crude exporters was attacked by traders last night as too little to feed soaring demand.

Oil prices failed to fall as had been hoped after the 12-nation Opec cartel said that it was increasing its production quota by 500,000 barrels a day from the start of November.

Abdalla Salem el-Badri, Opec’s secretary-general, said that the move was a response to the crisis in the American mortgage market, which has led to financial instability around the world and heightened the risk of a recession in the United States. “We have seen the financial market and the sub-prime mortgage crisis putting some clouds on the horizon,” he said.

A spokesman for the group, which produces almost a third of the world’s oil, said that the increase would be in addition to Opec’s existing production levels, which are already running ahead of the published quotas.

Yet market participants’ hopes for an increase of a million barrels were dashed. Crude prices rose in London and New York, with New York up 10 cents immediately after the announcement to $77.59, near their record high of $78.77.

Phil Flynn, of Alaron, the brokerage, said: “They were really forced into a corner by the high price of oil and the world was going to gang up on them if they didn’t do something. However, I think the rise was already priced in. The market was hoping for a million barrels.”

Christopher Jarvis, of Caprock Capital Management, said: “Given the global credit crunch and the No 1 consumer on the ropes, Opec’s decision to raise production is symbolic and sends the message that they are willing to raise production to offset record crude prices, much-needed as the fourth quarter supply/demand balance remains tight for the US.”

Analysts fear that global stocks of crude could be pushed down to their lowest levels in three years this winter.

Saudi Arabia, the world’s biggest crude exporter, is expected to be the driving force behind the increased production levels. Among the countries meeting in Vienna yesterday, Iran and Venezuela were particularly opposed to any increase, ministers said.

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