Opec producers today said they were prepared to raise oil output limits but admitted they had little left in their armoury to rein in $53-a-barrel crude.
Meeting on Wednesday, the Organization of the Petroleum Exporting Countries is struggling to contain prices because it is operating close to full crude production capacity and can do nothing to combat a global squeeze on transportation fuels.
Leading producer Saudi Arabia, along with Nigeria and Indonesia, backed a proposal by Kuwait for an increase in supply limits of 500,000 bpd, 2 per cent.
Any increase is likely to be read in oil markets as little more than a political gesture to meet concerns in Europe and the United States about the impact of stubbornly high energy costs on economic growth.
Saudi Oil Minister Ali al-Naimi said the group was already meeting global crude demand and blamed refinery bottlenecks for high fuel costs.
US light crude eased 7 cents to $53.43 a barrel and has averaged nearly $51 a barrel so far this year, up from a $41.47 average in 2004 and $30.99 on 2003.
Last year's Chinese-led demand boom took producers and refiners by surprise after years of slow investment in capacity across the upstream production and downstream refining industry sectors.
Saudi Arabia is ploughing $50 billion into rebuilding its cushion of spare production capacity and upgrading its export refineries.
Iran, OPEC's second biggest producer, said the group was already at full stretch, leaving it powerless to push down prices.
"OPEC members are already pumping at full capacity and can do nothing about prices," said Iranian oil minister Bijan Zanganeh in Tehran.