Rich countries lean on Opec

Fuel protests gripped Europe last week

The world's richest countries have put further pressure on the oil producers cartel Opec to bring down the price of oil.

The finance ministers of the G7 group of industrialised nations expressed concern about the adverse impact on the world economy of the price of oil, which has tripled in the past two years.

European countries have been gripped by fuel blockades in the past two weeks by protesters demanding cuts in oil prices and fuel taxes.

A prolonged increase in the oil price could cut up to 0.75% off world growth

Nick Stern, chief economist, World Bank

The ministers were gathered in Prague ahead of the World Bank/IMF annual meeting.

About 1,000 protesters blocked the centre of the Czech capital in an attempt to disrupt the meeting.

The G7 ministers also indicated that they were prepared to intervene again if necessary to stabilise the European single currency, the euro, which was boosted on Friday by the joint intervention of the major central banks.

But they disappointed campaigners who were hoping for fresh intiatives to boost debt relief for poor countries.

Need for 'greater stability'

In their communique, the ministers said it was important that the price of oil returned to a level consistent with economic prosperity.

All and not only Opec countries should raise production so as not to endanger global growth

German Finance Minister Hans Eichel

"It is crucial for the world economy that Opec and oil producing countries take actions to contribute to a reduction in oil prices and greater stability in oil markets," the statement said.

An Opec promise earlier this month to boost oil supply by 800,000 barrels a day has had only limited impact on the price of oil.

Opec President Ali Rodriguez said that Opec was not seeking a confrontation with the G7.

"We are not great military or economic powers, but developing countries seeking to defend our rights over our natural resources," he said.

"It would be grotesque to try to confront the big world powers. On the contrary, they are our customers," he added.

He said that there was no shortage of oil supply, and welcomed moves by President Clinton to break into the US strategic oil reserve to bring the price down further.

"Oil prices are perhaps the largest cloud in the relatively blue sky of the global economy," U.S. Treasury Secretary Lawrence Summers warned.

That was confirmed by the World Bank's chief economist, Nick Stern, who ealier told the BBC that "a prolonged increase in the oil price could cut up to 0.75% off world growth" - which amounts to a loss of more than $200bn worldwide in potential output.

And non oil-producing developing countries would be particularly hard-hit, the Bank warned.

Calls for further action

French Finance Minister Laurent Fabius said that the G7 would be writing to Opec countries next week to express their concerns.

But there were reports that some rich countries wanted to go further, with the Germans calling for a "common oil policy."

UK Chancellor Gordon Brown confirmed that there were no plans to hold a summit with Opec countries, as Mr Fabius had at one time suggested.

But Mr Brown promised concerted international pressure to bring down the price of oil.

Calls to cut the duty on petrol have been consistently rejected by the UK Government, angering protesters keen to see pump prices more in line with those in Europe.

They should now take action, as they promised, to get the price of oil down

UK Chancellor Gordon Brown

Mr Brown said that the high price of oil and the damage it was doing to the world economy had become unacceptable.

"We're taking co-ordinated action because of our concern about world oil prices, our desire to get the price down, our desire to make Opec aware that when the oil price goes from $11 to over $30 that does create conditions that are difficult for all countries," he said.

"They should now take action, as they promised, to get the price of oil down."