China has announced plans to raise petrol and diesel prices by more than 16 per cent, a sign that the country’s fuel subsidy regime is buckling under pressure from a soaring global oil price.

China’s National Development and Reform Commission said that petrol and diesel prices would rise by 1,000 yuan, or $145, per tonne, while aviation kerosene would increase by 1,500 yuan a tonne. It said that prices were being adjusted to reflect the gap between soaring international crude prices and state-set domestic prices.

The announcement, which triggered a $4 fall in the oil price to about $132 a barrel, came amid growing signs of a rift in Opec, the oil exporters’ cartel. Venezuela snubbed Saudi Arabia, saying that it would not attend a weekend energy summit of oil-producing and oil-consuming countries in Jeddah. Saudi Arabia has called the summit for this Sunday amid mounting concerns about crude’s soaring price, which hit record highs of nearly $140 this week.

However, Rafael Ramirez, Venezuela’s Oil Minister, said that he saw no need for the gathering and had no plans to convene with other producers before a scheduled Opec meeting in September. Another Opec member, Ecuador, is also not planning to attend.

The snub came as Saudi Arabia, the world’s top producer, yesterday confirmed plans to raise daily output by 200,000 barrels to 9.7 million. Its move, made independently of other Opec members after intense lobbying by the US, Britain and other countries, puts Saudi output at its highest since 1981 and 6 per cent above the level in May.

The decision was intended to rein in price rises and reassure consumers that the oil market is well-supplied. However, it has displeased hawkish, antiAmerican Opec members, led by Venezuela, which yesterday gave a frosty response to Saudi Arabia’s unilateral step. Mr Ramirez said: “We will take our decisions over output in the framework of Opec. We do not think it is necessary to increase production. The production that is being added now is aimed at building inventory.”

A spokeswoman for Opec in Jeddah said that all other ten member states of Opec, which produces 40 per cent of the world’s oil, are likely to send representatives to the meeting. It will also be attended by Gordon Brown. Some 40 energy ministers plan to attend.

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