More calls for increase in oil production as diesel hits

Diesel fuel nozzle

The UK average for a gallon of diesel is on the brink of £6, according to the AA. At £5.99 a gallon (131.8p a litre), pump prices are expected to break through the benchmark figure anytime now.

The AA said that UK diesel prices were the highest in Europe after Norway.

Meanwhile, petrol prices also continue to rise and currently average 118.5p a litre (£5.39 a gallon), according to the motoring organisation.

Overall, pump prices are about 40% higher than 12 months ago.

Calls for leading oil producers to raise production to try and bring down soaring prices intensified at a crucial meeting in Saudi Arabia on 22 June.

The UK, United States and other consumers urged producers to boost supply, blaming lack of capacity for the recent price surge.

Prime Minister Gordon Brown said more production was needed to ease price ‘uncertainty’ and ‘volatility’. But, Saudi Arabia, the world’s largest oil producer, blamed speculation, not lack of supply, for surging prices but said it was willing to raise output.

It has already announced plans to lift daily quotas to 9.7 million barrels by the end of July, an increase of about 500,000 barrels since May.

But, in an effort to calm worries over supply shortages, it said it would be prepared to pump more ‘if demand for such quantities materialises and our customers tell us they are needed’.

“We are very concerned for consumers in all countries,” Saudi King Abdullah bin Abdul-Aziz told the meeting in Jeddah, convened after prices rose 40% this year to close to $140. “And we declare our readiness to meet any additional needs.”

While the Saudi measures will be welcomed it would be naive to assume they will have an instant impact on prices.

The meeting, attended by energy ministers from more than 30 countries as well as senior executives from the world’s largest oil companies, took place amid fears that recent record oil prices were helping tip the US and other major economies towards recession.

www.bbc.co.uk