Petrol prices to remain high

PETROL prices at the pump are likely to remain at current high levels despite oil producing countries being given the green light to increase supply.

According to the AA's latest petrol price report, pump prices are at a five-year high due to the high cost of crude oil.

Oil cartel Opec yesterday agreed to increase its official production quota to its highest ever level of 28m barrels a day in an attempt to cool prices. However, industry experts said this would not translate to cheaper prices for consumers. The AA indicated the move would hold prices steady at best.

Oil analyst Bruce Evers at Investec said the increase merely legitimised the levels of oil that Opec was producing already. 'Pump prices will remain firm,' he said.

Paul Horsnell at Barclays Capital added the underlying price of oil would continue to rise, but tax levels were largely responsible for the relatively high price of petrol in the UK.'If you want to know where prices are going long term, ask the Chancellor rather than Opec,' Horsnell said.

US crude oil was $55.22 a barrel yesterday, only slightly lower than the $58.48 record hit in April this year.

Opec said it had also agreed on a new, larger oil basket - the combination of crude oils that Opec uses as its price gauge - that would increase from seven types of crude to 11.

'I think we are continuing with our protection of the market,' said Opec president Sheik Ahmed Fahd Al Ahmed Al Sabah. 'There is enough supply in the market. We are confident we can reach the fourth quarter with enough supply.'

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