Oil rose on Thursday after OPEC officials said the producer group will cut output by 1 million barrels per day as soon as possible to prop up prices.

Top world exporter Saudi Arabia will lower production by 300,000 barrels per day (bpd) as part of the plan, an OPEC delegate said. Oil has slid from a peak of $78.40 in July, alarming OPEC, partly due to brimming inventories.

"Prices would have kept coming down unless we saw concrete action by OPEC," said Adam Sieminski, analyst at Deutsche Bank. "The build in inventories is telling you the market is pretty well supplied."

Oil importing countries faced an unassailable challenge with the "historic high" price of oil. In 1864, a barrel of Pennsylvanian oil traded for 8.06 in dollars of the day ($97.79 of 2004) and in 1980, a barrel of Arabian light (posted at Ras Tanura) sold for 35.69 in dollars of the day ($82.15 of 2004). The world has not yet faced a "fourth oil shock" mainly because the price went up gradually to over $70 a barrel over a full three-year period, unlike in 1979-80.

There is a "fear" premium of $7 to $15 due to the destabilisation of the Gulf region. The world energy growth started to increase significantly from 1995. Especially since 2002, the real trend of growth rate of world oil demand is well above 2.25 per cent a year.? For some countries, notably China, Iran and Brazil, the growth rate is at least 4 per cent a year.

The question that naturally arises is whether the high price of crude oil is due to its physical shortage, the geo-political "risk" or demand exceeding supply in the short term. Or has the time for peaking of crude oil arrived?

Andy Lenderman, The New Mexican
Gasoline shortages and even higher prices loom, a new government report says, and it will take decades and trillions of dollars to replace American dependence on foreign oil.

The U.S. Department of Energy report directly addressed the concept of peak oil and how to deal with it. Peak oil means oil production is maximized and supply goes down from that point forward. Coupled with a surge in demand from countries like China and India, some energy experts say this could be a problem for America's economy.

Nick Galvin, Sydney Morning Herald
Oil is close to running out, and chaos will follow, according to a US expert.
----
Richard Heinberg is an unlikely latter-day Jeremiah. The contrast between this quietly spoken Californian college professor and accomplished classical violinist and his explosive message couldn't be more marked.

Heinberg, who is embarking on an Australia-wide speaking tour, is a leading proponent of the "peak oil" theory.

Matthew L. Wald, NY Times
...When nuclear reactors were first commercialized almost half a century ago, every self-respecting electric utility wanted one. They were encouraged by a government that saw nuclear energy as a peaceful, redemptive byproduct of the deadly power unleashed at Hiroshima. The federal official for promoting nuclear energy, Lewis L. Strauss, said it would produce electricity “too cheap to meter.”

by Tom Whipple
This week the UN is to come up with a sanctions resolution that will keep Iran's two million barrels a day of exports flowing and at the same time convince Tehran to give up on uninspected nuclear enrichment.

Crafting such a resolution is likely to take some doing as the Chinese, who are more concerned about losing oil imports than whether or not Tehran comes up with an atomic bomb, have to sign off on any sanctions plan.

Terry Macalister
The Guardian

· Supplies limited by lack of storage capacity
· Big six have already raised prices at least 35% this year

The government gave a warning yesterday that Britain was heading into another winter of potential power shortages as one household gas supplier announced a record 30% increase in prices.

The energy minister, Malcolm Wicks, said rising demand and plunging output from North Sea fields cancelled out the benefits of new gas pipelines from Norway and the Netherlands.

Discussions over energy co-operation are set to dominate Venezuelan President Hugo Chavez's visit to China, which began on Tuesday.

Oil producing Venezuela wants to reduce its reliance on the US, to which it exports most of its oil despite the two countries' ideological differences.

China offers a lucrative alternative market, as Beijing needs oil supplies to maintain its rapid economic growth.

By Alex Lawler

LONDON (Reuters) - Oil rose to almost $72 a barrel on Monday as
Iran's supreme leader said the Islamic Republic would press on with its nuclear work, implying it will not heed a U.N. demand to stop enriching uranium.

The row over Iran's nuclear program has raised concern of disruption to oil flows from the world's fourth-largest exporter. Iran had said it would respond formally by Tuesday to Western incentives to halt enrichment.

By Daisuke Wakabayashi

PRUDHOE BAY, Alaska (Reuters) - Oil production from the western half of BP's giant Prudhoe Bay oil field in Alaska has risen above 200,000 barrels per day, the head of BP's Alaskan unit said in prepared remarks to a committee of the Alaska state legislature on Friday.

"The western operating area has now been restored to production of over 200,000 barrels per day. We are continuing our inspection program and have added additional aerial and ground infrared monitoring of this side of the field," Steve Marshall said in his speech to the Joint Senate and House Resources Committee, a copy of which was given to Reuters by BP officials.