Oil prices have soared for weeks as traders worried about the threat of sabotage against the Iraqi oil infrastructure and a possible decline in Russia's oil production.

A rash of buying by institutional investors also contributed to the price rise, fueling concern that crude oil would top US$50 per barrel.

But the markets have cooled this week and oil prices dropped for a third straight day to $45 per barrel on Tuesday.

Kuwait's Foreign Minister Sheikh Mohammed Sabah Al Salem Al Sabah said, however, the price drop was not enough.

"We would like to see stable lower oil prices.

We are producing at maximum capacity, hoping to stabilise the prices," he told reporters.

"The oil prices have been driven up by speculation.

It's been driven by people who are outside the region," Sheikh Mohammed said.

"Still, they are high and the producers are not responsible for this."

Sheikh Mohammed was in the Indian capital to sign a framework agreement to start negotiations on a free trade pact between the Gulf Co-operation Council, or GCC, and India.

The six-country GCC bloc, which comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, is important to India's economic interests, because of its dependence on oil imports and the remittances that come from the 3.5 million Indians working there.

India imports nearly 70 percent of its annual crude oil requirements and depends primarily on Middle Eastern supplies to run its refineries.

The recent increase in global oil prices has pushed up inflation in India to a 3 1/2-year high of nearly 8 percent, forcing the government to lower duties on oil products.

Sheikh Mohammed said Kuwait, the world's third largest producer, is also planning to increase oil exports to India.

"It is in our interest to increase shipments to India," he said.

"We are considering increasing (crude) supplies to India.

We are also interested in investing in India's refinery business."

He did not give specifics.

Also Wednesday, Sheikh Mohammed was separately signing three agreements, including an extradition treaty, between Kuwait and India.

- Nampa-AP

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