Oil is the lifeblood of the world economic system. At first sight, the good health of the global economy depends on sound circulation and so requires more oil, rather than the recently announced production cuts. But oil is also a finite resource. If stable, high prices need not be a disaster. For the most part, they provide the right incentives for consumers and producers.

This week, the Organisation of the Petroleum Exporting Countries announced that from February next year it would cut output by half a million barrels a day. This followed October's cut of 1.2 million barrels a day. Opec, the cartel accounting for 43 per cent of the world's production of oil, justified its decision in terms of high stocks and growing spare capacity.