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Last Updated: Friday, 7 May, 2004, 21:20 GMT 22:20 UK
Price of oil breaches $40 barrier
Oil drilling
Oil prices have reached $40 a barrel in the face of renewed violence in the Middle East.

On New York's Nymex exchange, the price of crude oil topped out at $40.05, finishing the day at $39.93.

The price is not far off an all-time high of $41.15, reached in October 1990 after Iraq invaded Kuwait.

The rising cost of oil is driving petrol prices higher worldwide, which could prove to be a factor in November's US presidential election.

The price spike drew an unfavourable response from US Treasury Secretary John Snow.

It's become quite clear that the oil industry and oil infrastructure are in the crosshairs
John Kilduff, Fimat USA
The rise was "unwelcome and unhelpful", he told CNBC television.

In the UK, the price of oil also climbed towards 13-year highs, almost reaching $37.


One factor in the concern among traders driving the high prices is the pictures of US soldiers abusing Iraqis in Baghdad's infamous Abu Ghraib jail.

"There is worry over what will happen at the time of the (30 June) handover," Dr Leo Drollas of the British Centre for Global Energy Studies told the BBC.

There is also concern at the attack on a Saudi office of a foreign oil firm earlier in May, which killed six people including five foreigners.

A week earlier, the main oil terminal in the southern Iraqi port of Basra was attacked.

"A security premium has definitely been growing," said John Kilduff, senior energy analyst at Fimat USA.

"It's become quite clear that the oil industry and oil infrastructure are in the crosshairs of the insurgents in Iraq and terrorist groups."

The BBC's Evan Davis
"Oil prices are not as high as in the early eighties"

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