Oil price rise despite Opec increase

At first on Monday oil prices moved slightly lower in response to Opec's decision over the weekend to increase production by 1.5 million barrels a day.

But crude oil on the New York Mercantile Exchange ended the day 58 cents higher at $32.26 per barrel.

In London, Brent crude rose above $30 a barrel again to reach $30.20 a barrel, 53 cents higher.

The price of oil has been pushed up by a cut in production in Venezuela because of a general strike. The possibility of a war with Iraq has added pressure.

The markets think the Opec production increase will not be enough to fill the gap.

They were also rattled by an announcement from Statoil that two North Sea oil fields were being closed for technical reasons.

Supply threats

The high cost of oil could threaten the global economy which is still struggling to show any significant growth.

Oil shipments by Venezuela, which supplies 13% of US needs, are still down to about 20% of normal export levels.

Iraq sells up to 2 million barrels per day on the international market, but that would be stopped by a war.

Opec agreed to increase official production after an emergency meeting in Vienna.

"Opec is trying to send a very strong message that it will do its utmost to stabilise demand and supply," said the cartel's president Abdullah bin Hamad Al Attiyah.

However, Nigeria's oil minister said that while Opec was committed to stabilising the price, oil remained cheap compared to other commodities.

Developed countries should reconsider their tax policies if they want dramatic cuts in fuel prices, Dr Rilwanu Lukman told the BBC's World Business Report.

Another Opec meeting is scheduled for 11 March.