Opec chief warns of oil price slide

OIL prices could dip dramatically in the next few months unless all major producing nations agree to extend a recent deal to keep the lid on production, Opec secretary general Ali Rodriguez warned today.

He said demand was expected to weaken further in the next few months, and coupled with rising American stocks, threatened to send oil prices tumbling unless an agreement between Opec and five non-aligned producing nations holds.

Oil prices have fallen by about a third since the 11 September attacks on America. Today, Brent crude for March delivery rose 10 cents to $20.43 a barrel.

Non-Opec member Russia, now the world's second largest oil exporter after Saudi Arabia, agreed to cut production by 150,000 barrels a day from 1 January for three months and Rodriguez will meet Russian officials early in March to try to persuade them to extend the agreement. Both sides are thought to have breached agreed quotas last month.

Rodriguez said an extension of the agreement with Russia was required to ensure that a new crisis in oil prices is avoided.

Crude slipped below $10 a barrel as recently as 1998, before rising to a decade high of more than $35 18 months ago. Faced with a weakening global economy Opec has cut output four times in 14 months to try to hold prices between $20 and $25 a barrel, but failed to stop a barrel of Brent dipping to a 29-month low of $16.65 late last year.