Oil prices are likely to remain high, whether or not there is a war with Iraq, a senior Irish economist has said.

Mr Eoin Fahy, chief economist with KBC Asset Management, believes the Iraqi situation will have little impact on the price of oil as Iraq produces only 1.5 million barrels of oil per day, out of a worldwide daily production total of 77 million barrels.

"Given that there is a potential surplus of five million barrels per day across the globe, any disruption in supply should not cause problems in the medium term," he said. However, he believes oil prices are strong, and will remain so, because of the emergence of a "surprising discipline" among OPEC members who have been notorious in the past for breaking their own quotas.

"Though they only supply a third of the world's daily oil, (they) can influence the oil price by curtailing their own production thereby maintaining a price where it is just economically attractive for all involved in the oil market."

He also suggested any economic damage that might be done by a higher oil price should be offset by several factors. Global oil consumption is rising by only 1 per cent this year, the lowest level in modern times. He also noted a huge shift worldwide to gas.