Prime Minister Paul Martin said Canada would increase its oil production to help stabilize world markets as prices skyrocketed.

The move is in response to requests from the International Energy Agency, whose 27 member countries have been asked to release reserves or increase output, Martin told reporters. Canada does not keep oil reserves because it is a net oil exporting country.

"Canada, through the offices of the deputy prime minister and the minister of energy, will be saying that we are there and that we are prepared to do our part," Martin said.

After checking with local companies and provincial governments, Canada will have excess supply ready to export "soon" in order "to stabilize the prices, to make sure there is, in fact, stability in the prices, at the same time as helping the Americans," he said.

The announcement flies in the face of earlier reports that Canada's oil patch in the western Alberta province was already running at full capacity.