Bush’s 21 January comments sparked a $0.7-a-barrel jump in prices to two-year highs of $34.61 a barrel for February US light crude. Even the decision by Venezuelan tanker pilots to abandon their near-two-month strike failed to control the bullish run. Officials from Petroleos de Venezuelasay that 90 per cent of their workers are still at the pickets after voting to prolong the strike.

Senior OPEC members have now admitted the organisation could not provide double cover if both Iraqi and Venezuelan exports are hit at the same time. ‘It will be difficult to close this gap with the limited output capacity in the world and this may cause prices to rise substantially,’ Algerian Energy & Mines Minster Chakib Khelil told a Saudi newspaper on 20 January. He said that Algeria was pumping at its full capacity of 1 million barrels a day.

If Iraqi and Venezuelan oil are both taken off the market concurrently, the only chance to balance the market may lie in a seasonal demand dip in the second quarter. However, analysts say that global oil stocks will remain very tight and strategic reserves are likely to be opened. That will leave the market short for the rest of the year.