Oil down after Opec boost

Opec ministers continue discussions on Monday

Oil markets have reacted positively to the reported decision by ministers from oil producing countries to increase production by 3%.

In Japan, the price of light crude fell by almost one dollar a barrel in early trading.

We cannot solve the whole problem

Abdullah bin Hamad Al Attiya, Qatar Oil Minister

Ministers from Organisation of Petroleum Exporting Countries (Opec) are continuing their talks in Vienna on Monday.

There has been no formal announcement on the decision to raise daily production to 800,000 barrels a day.

During the past week, the price of oil hit a 10-year high of $34 per barrel.

Analysts say it is unlikely that prices will drop to the psychologically important $30 a barrel threshold, because of the coming winter in many oil consuming countries.

The BBC economics correspondent says that with oil stocks at their lowest level for 20 years, the increase in production will in the medium term only restrain the upward movement in prices.

Qatar's Oil Minister Abdullah bin Hamad Al Attiyah said Opec "did all that we could, but we cannot solve the whole problem". He added that Western governments had to address the issue of high fuel taxes.

Opec says it wants oil prices of around $25 a barrel, with a target band of between $22 and $28.

European reaction

Ministers from oil consuming countries have given a cautious reaction to reports of the increase in oil production.

The shortages in France have caused long queues

In France, where the crisis led to a six-day blockade of fuel refineries, Finance Minister Laurent Fabius, said the decision was a "step in the right direction."

But German Transport Minister, Reinhard Klimmt, said: "This is still not enough. Opec must produce more."

In the US, White House chief of staff John Podesta said: "We're short on oil... I think this is a substantial increase, led by Saudi Arabia... but we're going to have to take a hard look and see whether it's enough."

The organisation's third production boost this year is towards the lower end of expectations. Saudi Arabia, for example, had pressed to raise production levels by a million barrels a day.

High oil prices increase inflation and restrict growth in America and Europe, who both import the majority of their oil supplies.