THE Government may rethink plans for a fuel tax rise of up to 2p a litre after hopes of an early cut in oil prices were dashed.

Chancellor Gordon Brown is to ''review progress'' in August before deciding whether to impose September's duty increase which was announced in the Budget.

And Prime Minister Tony Blair said last night: ''We don't need to take the decision right now, we will take it later.''

The news came after a stormy meeting of the Organisation of Petroleum Exporting Countries (Opec) in Beirut.

Although oil producing countries announced an extra two million barrels a day many analysts said that was not enough. Market speculators appeared to agree - driving the price of crude oil even higher.

Petrol companies warned last night that unless oil prices began to fall sharply another round of increases were inevitable.

Fuel protestors have called on the Government to scrap this September's duty increase, which works out at about 9p a gallon.

They are threatening to hold demonstrations in Newcastle next week.

Petrol prices have risen remorselessly ever since the terror attack on Westerners in Saudi Arabi last month.

The highest price for unleaded petrol in the North-East - 96.9p a litre - has been recorded in Tynedale.

Mr Brown said: ''As far as Britain is concerned, it is in no one's interests to have petrol prices higher than expected. And I understand the worries of motorists, hauliers and business generally.

''That is why it has been important, and will continue to be important in the run up to the next meeting of Opec on July 21, to maintain the focus on the source of the rise in world oil prices, and in particular on production targets."

But any decision to postpone the increase will have a major impact on the Government's spending plans.

Mr Brown said: ''It is important for the British economy that we have the strength to get the balance right between a fair deal for the motorist and haulier and the needs of the public services and of stability, as well as our environmental responsibilities."

''Rather than opportunistic, short-term, day-to-day reactions to fast changing events, which do nothing for stability, I will review progress in August."

Opec agreed yesterday to raise output quotas by two million barrels a day from 1 July and a further 500,000 barrels per day from August.

But the move fell short of proposals put forward by Saudi Arabia. It wanted an immediate increase of 2.5 m barrels per day.

That plan - which was widely supported by Britain and America - was torpedoed by Iranian oil ministers who favoured a far more modest increase of around 1.5 million barrels per day.

The final agreement did nothing to calm world market nervousness that the rising price of crude could spark a global recession.

By last night the price of a barrel was still above $40.

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