Oil prices eased a little yesterday after Opec agreed to lift output but dealers said the weekend pact was too little, too late to bolster US fuel stocks anytime soon.
The Organisation of the Petroleum Exporting Countries at an emergency meeting on Sunday increased production limits by 1.5 million barrels per day, seven per cent, to compensate for six weeks of losses in strike-bound Venezuelan supplies.
US light crude by 1000 GMT was off 34 cents to $31.20 a barrel and London Brent in early trade fell 38 cents to $29.29.
Fears that a US assault on Iraq may be only weeks away are helping support prices that recently hit a two-year high of $33.65 for US crude.
Analysts said yesterday's price fall had been contained because traders saw no short-term relief for crude inventories in the US that are near 26-year lows.
"It's just enough for the moment but it's not going to push prices down much," said Adam Sieminski of Deutsche Bank in London of the Opec pact.
"I certainly see (US) oil staying above $30 until the Venezuelan situation is sorted out," said Paul Ashby, oil and gas analyst at ABN Amro in Sydney.
Oil from the Middle East takes four to six weeks to reach US shores, while Venezuelan crude, which normally accounts for 13 per cent of US imports, arrives in about five days.
"There are delays in getting oil from the Middle East to the United States, plus Opec's agreement is for 1.5 million barrels per day, but prior to the strike Venezuela production was about 2.5 million," said David Thurtell, commodities strategist at Commonwealth Bank in Sydney.
"The global market is going to remain tight and with ongoing war fears, you've got to be pretty brave to sell oil at the moment."
There are worries about how much of the extra oil Opec can actually deliver.
The 1.5 million bpd increase was divided pro-rata among members, meaning Venezuela was also granted its share of the higher output limit despite the 43-day-old strike that has slashed its exports by 80 per cent to 500,000 bpd.
Many others in Opec have little or no spare capacity to bump up production, leaving Saudi Arabia to provide the lion's share.
Riyadh fears an oil price shock that would dent demand for its crude if a US-led war in Iraq should come before Venezuelan supplies are restored.
Venezuela, Opec's third-biggest producer, is fifth in world exporter rankings, while Iraq sells up to two million bpd overseas under the United Nations oil-for-food programme.
Signs are that dealers are already planning to go without Baghdad's crude, cutting back on Iraqi purchases under the UN humanitarian exchange, in case war prevents delivery.
In recent weeks Iraqi exports have been running near full capacity but industry sources said last Friday that sales for the week had dipped by half to just 900,000 bpd.
Opec President Abdullah al-Attiyah said on Sunday ministers would meet again if Venezuela restores full production. The group's next scheduled gathering is for March 11.
Opec's agreement brings the cartel's official production ceiling for its 10 members bound by quotas to 24.5 million bpd.