The move is expected to cut demand in the second largest energy consuming nation in the world.

In late morning trading, the price of West Texas Intermediate oil fell back to $133.76 on the New York Mercantile Exchange, roughly the same price as the previous week, but some way off the all-time record of $139.89 set on 17 June.

The market continues to focus on Saudi Arabia’s meeting in Jeddah on 22 June that will aim to find a solution to record oil prices and investigate the role of speculators in financial markets.

London-based investment bank Barclays Capital says the size of a potential Saudi Arabian output increase at the Jeddah meeting may be less important than the signal it sends in terms of policy re-orientation.

“For the past two years or so, policy can perhaps be characterised as being led by the aim of bringing inventory levels back to more normal levels, in order to allow output interventions to have more rapid and more significant results,” the bank says.

It argues that while the presentation of the message behind policy
will matter, the momentum for further immediate price rises may well cool.