Opec agrees to extra 800,000 barrels

Click to follow
The Independent Online

The world's biggest oil producers agreed yesterday to pump an additional 800,000 barrels of oil a day in an effort to reduce soaring fuel prices as up to 300 petrol stations in Britain faced closure and panic buying was reported.

The world's biggest oil producers agreed yesterday to pump an additional 800,000 barrels of oil a day in an effort to reduce soaring fuel prices as up to 300 petrol stations in Britain faced closure and panic buying was reported.

But the agreement - forced through by Saudi Arabia amid mounting international pressure - was accepted only grudgingly by most of the 11member states of the Organisation of Petrol Exporting Countries (Opec). Although more generous than forecast, few analysts believe the promised increase will be enough to bring prices down below the psychologically important mark of $30 (£21) a barrel. Last week oil prices hit a 10-year high of $34 a barrel.

In Britain at least eight fuel depots were closed yesterday by protests at high prices. Sainsbury's supermarket reported that a number of their forecourts were seriously affected, as panic buying pushed up petrol sales by 30 per cent. Ray Holloway, of the Petrol Retailers Association, said he expected "significant" further price rises and the disruption to worsen. "There is likely to be upheaval for some time to come," he said.

The impact of Opec's decision will become clearer when the London market reopens this morning. David Kern, chief economist at NatWest stockbrokers, said the deal would make little difference to the oil price in the short term but would help prices stabilise over time. He said the move was "not brilliant news but a modest step". "I think the price will peak at $35 to $36 and then stabilise and gradually come down. This move has made sure it won't get to $40," he said.

Lawrence Eagles, an analyst at the broker GNI, said the market would especially welcome Opec's decision to hold an extraordinary meeting to review output on 12 November, ahead of Ramadan, the Muslim holy period. "That is worth as much as 800,000 barrels a day on its own," he said.

In Vienna the oil cartel marked its 40th birthday by returning to a world stage it has not dominated since the fuel crises of the Seventies. An anniversary meeting that was expected to pass unmarked by the world was suddenly the centre of attention, and organisers were clearly unprepared for the huge number of reporters and television crews who descended on Opec's headquarters. But for many member countries, the celebrations soured as the organisation conceded to Western demands for greater production.

Formal meetings were twice postponed yesterday as delegates held urgent talks behind the closed doors of the Venezuelan representative's hotel suite. Eventually, official events got underway six hours late, but by then, news of the agreed increase had been leaked by delegates. The Venezuelans led opposition to a boost in production, and most Opec members were against it. Seven members are believed to be already producing at full capacity: lower prices will only hurt their income.

Comments