Oil Prices Jump to Record High

Oil prices today hit a new high amid fears over low fuel stocks as winter approaches and renewed concern about the security of supplies.

Brent crude futures soared to a record $46 (£25) a barrel, the highest price in the history of the International Petroleum Exchange. Prices began to move higher after it last week emerged that US stockpiles had fallen at a sharper rate than expected.

Extremely high demand and short supplies have been exacerbated by other factors - including increasing insurgency in Iraq - that have increased concern over the amount of oil available to meet winter demand.

Hilary Cook, of Barclays Stockbrokers, said the cost of crude was "uncomfortably high", but added that she expected it to cool off again rather than rise above $50. She said she believed the latest rise was a "short-term hiccup", caused partly by the impact of the weather.

Oil prices had been coming off the boil over the past month, but climbed following new data on US stockpiles. Concern over Iraq, and clashes in Saudi Arabia, have also contributed to the latest price increase.

Saudi security forces battled suspected al-Qaida terrorists at the weekend, while a French technician was yesterday shot in the Saudi city of Jeddah - the latest in a series of attacks intended to drive out western investors.

Meanwhile rebels in Nigeria, Africa's leading oil exporter, this weekend said they would extend an uprising across the country's oil-producing southern delta, where the Anglo-Dutch giant Shell has evacuated more than 200 staff from two oilfields because of increasing violence.

Uncertainty remains over the stability of supplies from Yukos, Russia's major exporter, following the company's battle against bankruptcy, which last week resulted in problems with output and deliveries.

These problems are taking place against a backdrop of high demand - growing at its fastest pace in 24 years - which is partly due to China's economic boom. Producers of crude oil are close to their limit, with only Saudi Arabia, the world's leading exporter, holding any significant spare capacity - around one million barrels per day.

Opec, the oil producers' cartel controlling more than half of global crude exports, is producing almost 30 million barrels a day, its highest level since the late 70s.

The Opec president, Purnomo Yusgiantoro, said the cartel was supplying enough crude oil to the market, and current prices were not due to any market imbalance. "This is because of hurricane Ivan and some problems in other places," he told reporters. "This is not a supply and demand problem. Opec supply is enough."

Hurricane Ivan, which has hit the Gulf of Mexico, has delayed shipments and disrupted offshore production.