Saudi Fears Send Oil Prices Soaring

Oil prices rose to a new high today as security concerns in Saudi Arabia and problems at US refineries unsettled markets.

US light sweet crude was up 56 cents to $62.87 (£35) a barrel, having gone as high as $62.90 - past Wednesday's peak figure - while London Brent crude rose 60 cents to $61.67 a barrel.

The latest jump in oil prices came after the US decided to close its embassy and consulates in Saudi Arabia, the world's most important oil producer, because of security threats.

Britain and Australia also issued warnings about the possibility of attacks, and Australian citizens were told to avoid travel to the kingdom because of fears over possible attacks on housing compounds.

"We have received credible reports that terrorists are planning attacks in Saudi Arabia in the near future," the Australian department of foreign affairs said on its website.

Britain's Foreign and Commonwealth Office also said there were "credible reports" that militants were planning attacks in the near future. It said British citizens in Saudi should maintain "the highest level" of vigilance.

The new price rise comes less than a week after the death of King Fahd of Saudi Arabia caused concerns that the kingdom could change its oil policy, despite analysts' predictions that there would be little alteration.

A further cause of geopolitical concern is the impasse between the west and Iran over the country's determination to press ahead with plans to restart nuclear work.

The EU has warned Iran - Opec's second biggest oil producer - about the threat of possible UN sanctions.

In addition to political concerns, the almost daily problems affecting US refineries at a time of high demand have put prices under pressure.

Refineries have been hit by more than half a dozen unplanned stoppages in the past few weeks, with plants showing the strain of trying to keep up with two years of unexpectedly strong demand growth after a decade of underinvestment.

Adding to an already long list of refinery disruptions, ConocoPhillips and the US refiner Valero Energy Corp shut units late last week. In March, a huge explosion rocked a BP refinery in Texas City, killing 14 people.

"We are seeing a string of troubles at US refineries, and gasoline inventory levels have been low," Naohiro Niimura, the vice president at the derivatives division of Mizuho Corporate Bank, told Reuters.

At the end of last week, Opec announced it had increased production by 300,000 barrels of crude a day, bringing the total to around 30.4m barrels in an attempt to ease pressure on prices.

Recent data pointed to strong US economic growth, keeping demand for oil and diesel high.

Oil prices are 40% higher than a year ago, although crude prices would have to surpass $90 to reach the inflation-adjusted high set in 1980.