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Kuwait's acting oil minister said on Monday that geopolitics and a lack of refining capacity was behind a surge in world oil prices and that a 500,000 barrels per day (bpd) increase agreed by OPEC would positively affect the market.

"We think that the production rise by 500,000 bpd will affect positively (the price)," Mohammad al-Olaim told reporters on the sidelines of an oil conference.

"It is in our interest that the price is appropriate for consumers and producers."

A weakening U.S. dollar would also keep oil prices on the boil. The dollar sank to fresh lows against major currencies on Monday, while the yen surged after a meeting of industrialized powers ended with no words of support for the beleaguered dollar, offering a green light to speculative sellers. (ID:nSYD248345: Quote, Profile, Research)

News of Iran's chief nuclear negotiator resigning has also raised concerns of more instability in the Middle East.

Analysts said the man named to replace Ali Larijani could present the West with a harder line in a long-running dispute over Tehran's atomic ambitions.

Saturday's announcement exposed a rift over tactics with Iranian President Mahmoud Ahmadinejad, who accepted Larijani's resignation and has taken an uncompromising approach in the nuclear stand-off.