Oil prices dipped - but failed to react sharply - today after Opec said it would boost production quotas by 500,000 barrels per day.

Light, sweet crude for October delivery fell 40 cents to $77.09 a barrel on the New York Mercantile Exchange. October gasoline fell 3.5 cents to $1.9436 a gallon.

The market’s tepid reaction signalled that investors had already priced in the increase, analysts said. Many investors hoped for a larger production boost.

Tim Evans, an analyst at Citigroup, said: “I don’t think a quota increase immediately changes anybody’s minds about where the price belongs.”

Earlier, prices had been pushed through the $78-a-barrel level, further boosted by attacks on pipelines in Mexico, the world's fifth-largest producer of crude.

At the beginning of last month, light crude hit a record of $78.77.

Opec has come under mounting pressure, particularly from the United States, to boost oil output to stem persistently high oil prices.

Of the 12 members of the cartel meeting yesterday, Saudi Arabia, the world's largest oil producer, had been expected to embrace the idea of a gentle production increase.

Venezuela and Iran, traditionally hawkish on the oil price, had been resisting.

Gholam Hossein Nozari, the acting Iranian Oil Minister, said yesterday: "There is enough crude in the market."

Analysts had speculated that Opec would opt for a small increase in daily production — of about 500,000 barrels — that would serve to realign its output levels but which would also help to put a lid on prices.

At present, Opec states are producing more than their official output target of 25.8 million barrels a day.

Yesterday the International Energy Agency, based in Paris, urged Opec to raise crude output, arguing that, as winter approaches, worldwide demand is likely to outstrip supply.

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