Oil prices have surged higher after the world's leading oil nations signalled they would keep production cuts in place.

Crude oil has rocketed by $2.50 a barrel (£1.50) in one week after the producers indicated that supply limits would be kept intact.

The production curbs, introduced last March, are due to expire in two months' time, but the Organisation of the Petroleum Exporting Countries (Opec) is widely expected to keep the cuts in place.

In January 1999, one barrel of crude oil could be bought for under $10.

Since then the price has soared to more than $25, as a direct result of production cuts agreed by members of Opec and several of their allies.

Six months or a year?

Iranian Oil Minister Bijan Zanganeh said: "We think we are going towards a unanimous decision on this."

An agreement to maintain output steady for another six months to the end of September was on the cards, he said.

Saudi oil minister and Opec's leading policy maker, Ali al-Naimi of Saudi Arabia, said should market conditions remain as they are, he would see no need to change the policy - possibly even for the whole of the remainder of 2000.

Peter Gignoux, head of the energy desk at Salomon Smith Barney in London said Opec appeared set "to reaffirm its determination to keep output cuts in place and keep the heat under oil prices".

A series of informal talks are being held in the run-up to Opec's spring meeting on 27 March in Vienna.

Opec has 11 members, which produce more than 40% of the world's oil and possess around three- quarters of the world's proven crude oil reserves.