OPEC has agreed a surprise cut in oil supplies from April, propelling crude prices higher and drawing a caution from the White House not to risk stunting world economic growth.
The deal slices 4 per cent from production limits for the group that controls half the world's oil trade to 23.5 million barrels a day, effective from April 1st.
Ministers said the Organisation of Petroleum Exporting Countries (OPEC) would also immediately eliminate 1.5 million barrels a day of leakage being pumped above existing supply quotas.
Oil prices rose on the pact, a repeat of an unexpected supply reduction last September. US crude was up 66 cents at $33.49 (€26.43) a barrel by late yesterday, valuing OPEC's reference basket well above the group's preferred $22-$28 target range.
However the move clearly worried the Bush administration moving into election year. "It is our hope that producers do not take actions that undermine the American economy andAmerican workers - and American consumers for that matter," said a White House spokesman.
A sustained rise in oil prices would inevitably be reflected at the pumps in Ireland. In recent months, petrol prices have been subject to conflicting influences, with rising crude oil prices but a falling value of the US dollar, the currency in which petrol prices are denominated.
Automobile Association figures show that the average price of a litre of unleaded petrol rose from 86.5 cents in October to around 90.7 cents now, an increase below the five-cent excise increase announced on Budget day. It remains to be seen how the two conflicting influences on prices will balance out in the months ahead, with the euro looking set to remain strong, along with crude prices.
Saudi Arabia said action was needed to prevent a price crash as demand slackens and world oil inventories build after the winter. "The inventory, where it is now, is fine, we don't want to see it building," said Saudi Oil Minister, Mr Ali al-Naimi.
