Opec Worries Drive Oil Price to $100 Close

The price of crude oil closed at more than $100 a barrel for the first time last night following a steep rise prompted by jitters over a possible tightening of supply by countries in the Opec cartel.

On the New York mercantile exchange, oil futures briefly hit $100.10 - the highest level since trading began in 1983. The benchmark contract for March delivery of crude oil ended the day at $100.01.

An explosion at a Texas oil refinery caused initial alarm among traders, following shutdown of the Big Spring facility, which processes 70,000 barrels of oil a day. There was also concern about heightened tension between America and Hugo Chávez's regime in Venezuela, a key oil producer.

But analysts said the real reason for a $4.51 rise during the day was mounting recognition that Opec could tighten the fuel flow to the global market when oil ministers meet on March 5.

Phil Flynn, an analyst at Alaron Trading, said: "The oil bulls were buffeted with unrelenting winter weather, an oil refinery explosion and an Opec cartel that has no regard for the world economy."

Opec nations are concerned about the prospect of an economic slowdown in America spreading across the world. A fall in industrial production could reduce demand for oil, pushing the price lower.

Algeria's oil minister, Chakib Khelil, who chairs Opec, told Reuters: "Production is not going to increase. It will either decrease or be stable."

Motorists can expect fresh increases in the price of petrol. In Britain, an alliance including the AA, the RAC and the Freight Transport Association, has called on the chancellor to scrap a tax increase of 2p a liter scheduled for April.

The Venezuelan government has become increasingly bellicose over compensation for the nationalization of an Exxon Mobil oil project.