Petrol Prices: Saudi Signals Action 'To Cut Costs'

The lacklustre recovery in the world economy has reportedly prompted Saudi Arabia to promise an increase in oil production in a bid to bring down prices.

Pressure from G7 nations to act had been mounting on Riyadh and other major oil producers amid concerns high oil costs risked harming growth.

Global crude benchmarks hit four-month highs of $117.95 last week and it is understood Saudi Arabia, the world's top oil exporter, remains content to see Brent Crude stabilise at $100 dollars a barrel.

London-traded Brent is currently trading above $111 and the Financial Times, citing a Gulf-based oil official, says production could be increased until the year's end.

A 30% spike in oil costs over the past three months has led to a creep back towards record fuel prices in the UK.

The average unleaded price is topping 140p-per-litre (ppl) while diesel is nearing 145ppl - both just over 2ppl short of the highs witnessed in April.

Rising oil and other commodity prices - while out of the Bank of England's control - have added to wider inflationary pressures on the economy.

A fall in the oil price would be unlikely to have any immediate impact on wider energy bills for the coming winter as firms must make their wholesale purchases in advance.

Last week's oil price rise was a market response to the US Federal Reserve's decision to begin a third round of bond-buying to boost money supply in the country's faltering economy.

The United States, in the run-up to November's presidential election, was among the countries urging oil producers to increase output.

It is said that Saudi Arabia would not be alone in pumping more oil to keep prices from rising.

In addition to the pressure on prices from economic stimulus measures in the US, Europe and Asia there have also been fears about security of supply amid tensions with Iran.