Oil price on rise despite Saudi pledge to lift output

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Saudi Arabia, the world's biggest oil exporter, will pump an extra 200,000 barrels a day and may increase output again if needed, Oil Minister Ali al-Naimi said in Jeddah.

But that had little effect on price. Ongoing concerns about Israel-Iran tension overshadowed the announcement to put US August crude up $1.10 at $136.46 a barrel and Brent up $1.29 to $136.15.

Analysts were sceptical whether the Saudi boost would impact on prices. They said rises in output had already been factored in, and Saudi Arabia'smove to pump more hadn't structurally changed the industry.

Oil prices are being driven by speculation, geopolitics and the weak dollar rather than a lack of supply, Opec president Chakib Khelil said after the Jeddah meeting. He said the Saudi output increase was "illogical" and may do nothing to lower prices.

Markets today were concerned by last week's Israeli military exercises, thought to be a warning to Iran that its patience was running out over the country's nuclear ambitions.

The markets today were heartened by news from Nigeria that militants will cease attacks on foreign oil companies from tomorrow for an unspecified period.

The Movement for the Emancipation of the Niger Delta, which last week attacked an offshore facility operated by Royal Dutch Shell, said it was "respecting an appeal by the Niger Delta elders to give peace and dialogue another chance".