The most bizarre event so far of the third Opec summit in Riyadh, which properly gets under way today, was the accidental broadcast yesterday of about half an hour of the proceedings of the private meeting of energy, foreign and finance ministers, discussing the idea of including a mention of the weak dollar in the summit’s final declaration. The footage was shown on the widescreen TV in the press room, and it is rumoured, right through the TV system in the Intercontinental Hotel, where the meeting was being held, until Saudi officials worked out what was going on - possibly alerted by wire service reports - and rushed to pull the plug.

The most sensitive comments were made by Saud al-Faisal, the Saudi foreign minister, who warned of the danger of a dollar "collapse" if the final statement mentioned the dollar. "Just indicating that we have charged finance ministers with studying this issue … would mean a decision taken by Opec would have the opposite effect and the media would pick up on this point," he said, in Reuters’ translation. "And then perhaps we would find that the dollar had collapsed, instead of us having done something in the interest of our countries."

His point was that any signs the group is further cooling on the dollar as the currency in which oil is priced - and more importantly, in which oil wealth is held - would alarm currency markets and trigger further dollar sales.

It is an embarrassing point to be caught making in public, in part because it carries a suggestion of Saudi politicians defending US interests. But in fact, defending the dollar’s value is an important policy objective for Saudi Arabia for purely selfish reasons. As Adam Robinson and Edward Morse of Lehman Brothers pointed out in a great piece in the FT last month, the weak dollar is already undermining the value of Saudi Arabia’s $800bn in dollar reserves. The Kingdom certainly does not want to weaken it any further.

US crude has gone roaring ahead to within a few cents of $88, as speculators get the bit between their teeth. You can watch Javier Blas talking about where oil goes next here.

The latest trigger has been identified as the threat of Turkish military action against Iraqi Kurdistan, which could disrupt Iraq’s oil exports through the northern pipeline from the Kirkuk field. But the flows through that pipeline are very small, averaging only about 100,000 b/d this year because of regular attacks, although they have been building up recently, leading - ironically - to talks about a more regular supply contract with Turkey.

The underlying reason for the price surge is that oil inventories are dropping, and look likely to be tight over the winter, as the International Energy Agency pointed out last week. Today’s soaring prices look like conclusive proof that the 500,000 barrel a day output increase agreed by Opec in September, which takes effect in two weeks’ time, definitely was too little, too late.

The next Opec meeting, the summit in Riyadh on November 17-18, looks a long, long, way away.

UPDATE: Oil has powered through $88, meaning that it has put on about $4 in two days. Opec has issued a statement saying it "does not favour oil prices at this level", but blaming everyone else for the surge in prices.

It says: "The rising oil prices which we are currently witnessing are, however, largely being driven by market speculators. Persistent refinery bottlenecks and seasonal maintenance work, ongoing geopolitical problems in the Middle East and fluctuations in the US dollar, also continue to play a role in pushing oil prices higher. Additional political tensions, seen during recent days, are also pressurizing oil prices upwards."

With that lot ranged against it, it is hardly surprising that Opec has lost control of the market.

Meanwhile, Goldman Sachs must be feeling pretty smug.

Opec is to have a new member, it seems; or rather, an old one back again. Ecuador’s oil minister Galo Chiriboga said on Monday that after a 15-year absence his country intends to rejoin as soon as possible. Because Ecuador never formally quit, just let its membership lapse, all it has to do is pay a couple of years of fees that it owes: about $5m.

Ecuador, it must be remembered, is a minnow in oil terms, with output of a little over 0.5m barrels a day about half that of Opec’s lowest-producing members, Qatar and Indonesia. But getting a thirteenth member on board, following Angola last year, is another sign of Opec’s growing prestige and influence. After Ecuador, it is suggested, Sudan could be next.

We should not get carried away about the all-mighty Opec, however. Its attempt to curb oil prices that were heading towards $80 a barrel failed dismally. It seems Opec has the power to raise the price of oil, but not to cut it.

Oil prices at $80 a barrel should be a source of happiness to crude oil producing countries. But the Organisation of the Petroleum Exporting Countries is not happy.

Abdalla el-Badri, Opec secretary general, said in its first response to the current record prices that oil prices were high and would not last, because they are not supported by oil market fundamentals.

“Prices are high. We are not favour of high oil prices,” Mr el-Badri told a small group of journalists, including myself. “I don’t think it’s permanent.”

“The fundamentals do not support the price at this time,” Mr El-Badri said after Opec this week agreed to increase its production by 500,000 barrels a day.

For Opec, the price reaction to its supply hike has been a blow. The oil cartel presented the decision as its contribution to prop up the world economy hit by the current credit squeeze.

“We care about you,” was Opec’s message on the day of the announcement.

But instead of prices cooling down, as the cartel hoped, crude oil cost surged hours later to a new all-time high of $80.20 a barrel. And oil analysts and the International Energy Agency, the industrialised countries’ energy watchdog, instead of welcoming the production hike, said that it was “too little, too late.”

The price surge has been a bad coincidence, Mr el-Badri explained, saying that Opec’s decision came as a tropical storm hit several US refineries and just a day after rebels blow up several natural gas pipelines in Mexico.

Mr el-Badri has a point here, but that is not going to change the public perception of Opec in consumer countries.

It did not take long for the oil market to deliver its verdict on Opec’s production increase. Just over 24 hours after the announcement that the goup would pump an extra 500,000 barrels a day, oil has surged to a new record of $80 a barrel.

Technical factors are part of it. Traders say there are big speculative positions in call options that will pay off above $80, and the hedge funds want to force the price up so they can collect.

But it also sheds an interesting light on the power of Opec. The economist James Hamilton makes a persuasive argument that Opec is not "a functioning cartel", but instead "a group of countries loosely announcing what individually they’d each pretty much want to do on their own anyway." (His work on Saudi Arabia’s oil production and potential is also interesting, although highly contentious.)

In a sense,it helps Opec to dispel its image as a sinister all-powerful cartel that can hold the world to ransom. The ministers always say: "we do not set the price"; the past 24 hours have proved their point. On the other hand, being exposed as ineffectual cannot be good for Opec either.

The timing was unhelpful, to say the least. As Javier Blas reports, the day after Opec agreed to raise its production, the International Energy Agency said the world would need less oil in the second half of the year than it had previously thought. It has cut its estimate of demand in the fourth quarter, which is when the Opec output hike will take effect, by 250,000 barrels a day to 87.8m, and cut its forecast of the "call on Opec" even more, by 300,000 b/d. That is not really the best possible support for the IEA’s argument that Opec should have done more. (The headlines from today’s IEA oil market report are on its site, although full details are not available to the public for another two weeks.)

However, even the IEA’s new prediction of fourth quarter demand is still some 700,000 b/d above Opec’s own  If the IEA is right, the market that is already tight, as Opec’s head of research Hasan Qabazard put it (watch the video here), will get even tighter. The reaction of the oil market suggests that no-one is worrying about flagging demand just yet.

Yet the IEA’s decision to cut its demand forecast was a result largely of a lower baseline being set by the numbers for June and July, when there was mild weather and some switching away from oil to other fuels. If the subprime crisis begins have a significant effect on global growth, then the oil market may look very different. As the IEA says "we may further revise our 2008 forecast as events unfold."

So we have the answers to the questions we posed during the day, here and here.

Opec did raise production, suprising some, but not anyone who listened to PFC Energy last week. (FT stories may require a subscription). And the 500,000 barrel a day increase was from current production of about 26.75m b/d, not the officially agreed level of 25.85m set at Abuja last December.

However, the International Energy Agency, which tries to do for oil consumers what Opec does for the producers, described the move as "a smaller increase than we would have liked," even if it was more than anyone would have expected a few weeks ago. And the reaction in the markets has been to push US crude up by about 80 cents, as of mid-afternoon New York time.

One factor in the market reaction may be the type of crude that Opec will be adding to the market. Its oil is sour - ie higher in sulphur - so it needs more refining to be turned into usable products, and in the US in particular, refinery capacity is in short supply. So the effect of today’s announcement for US light sweet crude prices - the West Texas Intermediate benchmark, for example - may be limited.

If the world stays out of recession, and oil demand holds up, expect the same pressure on Opec for another move at the next ministerial meeting, in Abu Dhabi on December 5, or even earlier, at the Opec summit in Riyadh on November 17-18.

As I write – about 10am European time - Opec ministers in Vienna are still debating whether to announce an increase in oil production. The comments of the ministers and officials arriving for a working breakfast with non-Opec countries earlier this morning were less than illuminating. The most telling was from Abdallah el-Badri, Opec’s secretary-general, who described near-$80 oil as a “problem”.

His choice of word shows how the caricature of Opec as short-term revenue maximisers is misplaced, and does a lot to explain why a production increase is now on the table.

There has been a lot of talk (including in the FT) about the how Opec remembers the Jakarta meeting in November 1997, when a rise in production was followed by the coincidence of the Asian financial crisis with two warm winters, which drove oil down to $10.

But there is another parallel that is perhaps more relevant – and particularly apposite today, on the sixth anniversary ‑ the aftermath of the September 11 attacks, when Opec, led by Saudi Arabia, helped steady nerves by promising that the oil would keep flowing. The group raised its production in January 2003, after Venezuela’s production was disrupted by a strike. (FT stories may require subscription.)

The financial turmoil resulting from the subprime crisis has been less dramatic, of course. But its economic implications could ultimately be more profound. Today is a chance for Opec to join the US Federal Reserve and the other central banks and authorities in playing its part in keeping the world economy out of recession.

As the Organisation of the Petroleum Exporting Countries discusses a production increase, as important as the actual volume of the hike is the level from which the increase would take place.

Opec, which controls 40 per cent of global oil production, is discussing a production hike of between 500,000 and 1.0m barrels a day. A 700,000 b/d rise has been suggested as a compromise.

A key question under debate is from which level the increase takes place. That is not an easy subject under Opec’s complicated system of production limits.

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When Ali Naimi, the Saudi Arabia oil minister, talks, the oil market moves. But Mr Naimi, the most influential Opec minister, has remained silent for the last five weeks and has said nothing so far in Vienna in the run-up to Tuesday’s Opec meeting.

The silence is raising eyebrows among the analysts and consultants that gather here in Vienna for the meeting. They are perplexed by the Saudi tactics and are agonising over their coffee at the ministers’ hotels in the Austrian capital looking for some new development to tell the oil traders in London and New York.

This morning, at Mr Naimi’s briefing – which involves journalists, including me, jogging with the minister at 7.30am – it was silence again. Not a single word on Opec’s policy.

Some analysts think Mr Naimi is waiting to surprise the market – and Opec colleagues – in a tactic used several times in the past.

Those who support this theory say that Saudi Arabia may push the oil cartel for an output increase to cool-down red hot oil prices. As most countries oppose the move, Saudi would be quietly trying to convince others on the need of the increase, the analysts said.

Others say that the Saudi silence is due to the desire of the kingdom to maintain a low profile in the Opec meeting as oil prices approach $80 a barrel.

These analysts argue that the last thing Mr Naimi wants, is to be seen in Washington, especially in the midst of the subprime crisis, as responsible for higher crude and petrol prices. Those who support this theory say that Saudi Arabia would not push for a production increase and, that in fact, the kingdom is satisfied with the current oil price and market.