Western leaders racked up the pressure yesterday on the other members of the oil cartel Opec to follow the lead set by Saudi Arabia and increase production to engineer a drop in soaring world fuel prices.
In a toughly worded statement, the Group of Eight nations, that includes Britain, the United States and Russia, urged all members of Opec to boost oil supplies to prevent high oil costs from derailing what it said was the fastest economic growth for 15 years.
The initiative, which should spark a slump in crude prices today, triggered a row between Opec's members as at least three major oil producing countries condemned the Saudis' action in language that could herald a split in the powerful organisation, which twice during the 1970s brought the world's economy to its knees.
The communiqué by the G8 finance ministers in New York said: "Lower oil prices would benefit the world economy. We call on all oil producers to provide adequate supplies to ensure that oil prices return to levels consistent with lasting economic prosperity and stability."
But hopes that Opec would offer swift backing to plans by Saudi Arabia to raise its production by 2.5 million barrels per day, or 11 per cent, were dashed as Libya, Nigeria and Qatar condemned the move.
Gordon Brown, the Chancellor, who has been leading a round of shuttle diplomacy between the G8, Opec and Saudi Arabia, said the Saudis' decision was "a major step forward".
Speaking on the fringes of the G8 meeting, Mr Brown said: "We welcome the decision by Saudi Arabia to raise their production target. I think it would be good for the world economy if the other producers reach a similar conclusion to increase production at [Opec's] 3 June meeting."
Oil prices hit a record of $41.85 (£23.42) a barrel last week, which has sent US petrol prices to new highs. "We want Opec to recognise the problem," Mr Brown said. "Opec accepts that they themselves have said that the sustainable price is a range of $22 to $28 a barrel. We have an expanding world economy and I want Opec to recognise its responsibility that something has to be done."
Opec has blamed heavy demand in the US, a build up of oil reserves by the White House, financial speculation and a lack of oil refining facilities in the West for the surge in the price.
Libya condemned the Saudi decision as "a mistake". Fethi bin Chetwane, its Oil Minister, said: "Saudi Arabia can't decide alone to increase production. This is too much."
Qatar's Oil Minister, Abdullah al-Attiyah, indicated that Opec should set a floor of $30 a barrel for prices. "$28 to $30 for the Opec [price] basket is a very reasonable price for producers and consumers," he said. Nigeria agreed.
Mr Brown acknowledged some western countries were building reserves but said this was outweighed by an excess of demand over supply because of rapid growth in China and other Asian nations. China yesterday said it planned to increase oil imports by 10 per cent.
Mr Brown said: "I have been talking to the president of Opec and he has issued a statement saying he recognised that there were large concerns." He refused to be drawn on whether the Treasury will cancel a 1.9p increase in fuel duty due to come into force in September saying he would not make Budget decisions in New York "as tempting as that might be".
He also refused to condemn the US for failing to take any steps to try to reduce demand for fuel before the start this week of the so-called "driving season" that sees millions of Americans embark on long car journeys in their gas-guzzling cars and camper vans.
Mr Brown said the G8 had achieved a breakthrough on debt relief for poorer countries by agreeing to extend the World Bank scheme for cancelling debts of Highly Indebted Poor Countries that had been due to be wound up this year.Reuse content