The G8 group of leading industrialised nations has called on the oil exporting countries to step up production in a bid to bring down soaring prices.

Following two days of talks in New York, the G8 finance ministers - including Chancellor Gordon Brown - issued a statement yesterday declaring that "lower oil prices would benefit the world economy".

The communique urged other members of Opec to follow the lead set by Saudi Arabia which announced on Friday that it would be increasing oil production by 600,000 barrels a day from next month.

"We now call on all oil producers to provide adequate supplies to ensure that world oil prices return to levels consistent with lasting global economic prosperity and stability," the statement said.

Earlier, at talks in the Netherlands, the Saudis indicated that they were prepared to go even further assuring US Energy Secretary Spencer Abraham that they would raise production by a further two million barrels if there was the demand.

The dramatic rise in oil price over recent weeks - which has seen the cost of a barrel of crude topping 40 US dollars (£30) has prompted concerns that global economic stability could be undermined.

The price increase has been driven by a combination of increased demand from China and the United States, and security concerns about Iraq and the Middle East. While the Saudis have said that they are willing to increase production, other Opec members are reported to be pumping at maximum capacity.

Updated: 09:59 Monday, May 24, 2004