Oil prices have fallen from their highest levels in a decade following signals from oil ministers that they will bow to sustained international pressure for an increase in production at a key meeting of the Organisation of Petroleum Exporting Countries this weekend.
But despite conciliatory messages from Saudi Arabia, OPEC's dominant member and the only leading exporter with substantial spare production capacity, and the normally hawkish Iraq, there were growing doubts that any rise would be sufficient to curtail significantly the oil price spiral.
The Minister for Finance, Mr McCreevy, said in France last night that his fellow EU ministers would issue a statement on oil at their meeting in Versailles today as the blockades which have disrupted transport in France in recent days spread to the UK.
The council of the Irish Road Haulage Association is to hold an emergency meeting this morning to consider its response to Mr McCreevy's refusal to reduce excise duty on diesel in advance of the December Budget. It warned that it could not rule out taking its protest to the streets if the Minister "failed to see the seriousness of the situation". But Mr McCreevy said he could not make Budget commitments that favoured any one sector.
The US yesterday stepped up its pressure on OPEC to deliver a large increase in production and warned it was "ready to exercise all options" if there was no agreement. But the US Energy Secretary, Mr Bill Richardson, declined to say whether the Clinton administration would release oil from the 570 million barrel US strategic reserve in an effort to depress prices.
Oil prices fell by more than $2 from recent 10-year highs amid expectations that the OPEC cartel will increase its output by about 700,000 barrels a day.
Many refineries have been reluctant to add to oil stocks as this could lead to large-scale losses given that there is no incentive to buy in a market where the future price is lower than current prices.
In any case, OPEC has already increased production twice this year with little effect on prices, which have tripled since slumping to under $10 a barrel two years ago.
As he arrived in Vienna for the OPEC meeting yesterday, the Saudi Oil Minister, Mr Ali al-Naimi, said that the cartel was going to "do its part to lower the crude price". But he insisted that OPEC countries should not take sole responsibility for prices, which have been running at 10-year highs of some $34.
"We hope that the consuming countries will do their part to lower the product price and lower the burden (on consumers)," Mr Naimi said, a reference to taxes that account for three-quarters of the price of petrol in Europe. The Iranian Oil Minister, Mr Bijan Zanganeh, said it did not seek exceedingly high prices or an artificial shortage of supply.
Ministers from the United Arab Emirates, Indonesia, Iraq, Russia, Iran and Qatar only arrive in Vienna today. A long series of private meetings between these ministers and the Venezuelans and Saudis as well as ministers from Kuwait, Mexico, Algeria and Libya is then expected before they come to an agreed position tomorrow.
Euro-zone finance ministers, meeting in Versailles yesterday, considered the outlook for the euro in the context of higher oil prices and the currency's weakness and pledged to speed up structural reform.
The fear is that the combination of high oil prices and a weak euro could boost inflation and choke off economic growth. However, the ministers insisted "growth remains robust in the euro area" and a "strong euro is in the interests of the euro zone".