GORDON BROWN gave the clearest hint that the September increase in fuel duties may be dropped when he promised last night that the decision will be reviewed in August.

The Chancellor, welcoming Opec’s decision yesterday to increase oil production by two million barrels a day next month, said he understood the worries of British motorists, hauliers and business.

He confirmed an exclusive report in The Times yesterday that he will consider dropping the 1.4p a litre increase due on September 1 if world prices remain high. And in a clear sideswipe at Michael Howard, he advised against “short-term, opportunistic, day-to-day reactions” to fast-changing events.

The Conservative leader continued to come under attack by ministers for his backing of peaceful fuel protests.

But hopes that a fuel crisis can be avoided rose as prices on both sides of the Atlantic began to fall after the Opec decision. In New York US light crude prices dropped by 68 cents a barrel to $39.28, while in London Brent crude slid by 46 cents to $36.40. The oil cartel, meeting in Beirut, agreed to raise its production ceiling by two million barrels in July and by a further 500,000 barrels in August. It will also meet again to look at the world situation on July 21.

The decisions fell below hopes of many international traders and ministers but there was a welcome for the pledge by Saudi Arabia and the United Arab Emirates to start raising production immediately.

Mr Brown said that the cartel’s decision was “welcome and essential” but insisted that the focus over the coming weeks should be on Opec and disclosed that he and other finance ministers would be pressing Opec to go further.

“Because it is the world oil price that has been rising, not least because of a shortage of oil supply to meet demand, it is in the British national interest that the focus is on Opec and its responsibilities,” he said. “And the short-term instability in the Middle East has meant no country can buck the global price. As far as Britain is concerned, it is in no one’s interests to have petrol prices higher than expected. And I understand the worries of motorists, hauliers and business generally.”

The Opec move yesterday will raise the cartel’s formal production target to 25.5 million barrels, although it fell short of hopes for more radical measures — including the possibility of a temporary suspension of the quota system.

Opec already pumps at least 2.3 million barrels a day beyond its formal quota, so analysts sounded warnings that the two million barrel increase may not be enough to boost actual supplies and stem price rises. Saudi Arabia and the United Arab Emirates insisted they would deliver about a million extra barrels of new oil supplies a day.

The two states are the only Opec members with significant surplus capacity to boost production and supplies.

“It’s a good agreement. We will be able to test the impact of the policy on the market before we meet again in July,” Abdullah al-Attiyah, Qatar’s Oil Minister, said.

Despite question marks over whether the action will cut prices, the White House praised the news. “This demonstrates that producers are taking concrete and immediate steps to address the global oil supply needs,” said Claire Buchan, the White House economics spokeswoman.

But oil traders and analysts remained sceptical. Nauman Barakat, a trader at Refco, a New York brokerage, said: “The feeling is that we have been short-changed. The market was convinced it would get 2.5 million.”

THE OIL GIANTS

Daily crude oil output of the 11 Opec countries:

Algeria 735,000 barrels
Indonesia 1.05 million
Iran 3.24 million
Iraq 2.12 million
Kuwait 1.74 million
Libya 1.2 million
Nigeria 1.8 million
Qatar 568,900
Saudi Arabia 7.1 million
United Arab Emirates 1.9 million
Venezuela 2.4 million

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