Fears of oil price hike fade

00:05 - 13 January 2003

Fears of a hike in the price of petrol receded tonight after members of the oil producers' group OPEC agreed to raise production levels.

The decision by the cartel to lift its target by 6.5% to 24.5 million barrels a day covers a shortfall in oil exports from crisis-hit Venezuela.

The move, announced after an emergency meeting in Vienna today, is aimed at keeping crude oil in the range of 22 US dollars to 28 US dollars a barrel.

Justin Urquhart Stewart of Seven Investment Management, said the decision was good news for motorists and the UK economy, although he believed it was unlikely to result in an immediate reduction in the price of petrol.

He added: "It could have been very unpleasant if they hadn't done anything. particularly if there's going to be further shortages in the event of war in the Middle East. The fact that they are willing to do something is encouraging."

The price of crude oil in London is currently just below the 30 US dollars a barrel mark but there have been fears it could go as high as 40 US dollars as concern grows about the impact of a possible conflict with Iraq.

BP increased the price of petrol at some of its stations by 1p per litre in the New Year, taking the average across the country to about 74.8p per litre.

OPEC's decision to call today's meeting follows a month-old strike in Venezuela, where opponents are seeking to oust President Hugo Chavez. It has cut the country's exports by about two million barrels a day.

Venezuela is normally OPEC's third largest producer and a major oil supplier to the United States.

OPEC president Abdullah bin Hamad Al Attiyah said after today's meeting: "OPEC is trying to send a very strong message that it will do its utmost to stabilise demand and supply."