The perception that oil supply cannot keep up with demand has fuelled another jump in prices around the world.
Producers insist they are struggling to keep the market calm
London Brent crude rose another 59 cents a barrel to $37.95, while US crude futures hit $40.92, close to their all-time high of $41.15.
The trigger was oil cartel Opec, whose president effectively admitted being powerless to cool the market.
A White House spokesman said the Bush Administration was urging oil producers not to act in ways harmful to the US.
Opec cartel president Purnomo Yusgiantoro said member states were already being allowed to produce well over their quotas, but oil prices have not steadied.
In fact, major oil producing countries are adding an extra 2 million barrels per day - 2.5% of worldwide demand - without having an effect on prices.
Kuwait steps in
Kuwait's energy minister came to the rescue by promising the Gulf state would pump extra oil.
Sheik Ahmed Fahd Al Ahmed said Kuwait would produce up to 2.4 million barrels a day, breaching its Opec quota by 600,000 barrels.
The International Energy Agency (IEA) said on Wednesday that Opec members were not pumping their full quotas. It identified 2.5 million barrels a day of spare capacity among 10 Opec nations; roughly half of it is in Saudi Arabia.
The current strength in oil prices, which have risen by one-quarter this year alone, is partly to do with old-fashioned supply and demand.
Buyers and sellers
There are supply concerns in the Middle East, where political instability is seen as a threat to oil output.
And markets such as the US, the world's biggest oil importer, are proving far more thirsty than analysts predicted, especially as the peak summer driving season gets into gear.
The latest weekly figures show US petrol stocks fell by at least 1.5 million barrels in the last seven days, the American Petroleum Institute said. The figures will add to pressure for prices to rise.
White House spokesman Scott McCellan said the US president "remains concerned" about rising petrol prices and that the US has been lobbying oil producers "not to act in a way that would harm our economy".
The IEA has raised its forecast for 2004 global oil demand growth to 1.95 million barrels per day, despite generally slow growth in developed economies.
Crucially, say analysts, the traditionally close relationship between demand and supply has partially broken down: for technical reasons, a number of the world's biggest producers, particularly outside Opec, have been unable to increase output significantly, leading to higher prices.
There are other, more subtle factors at play.
Nowhere near all of the apparently increased demand is connected with increased consumption.
The current surge is not just to do with consumption
Instead, it seems that major buyers - especially governments - are stocking up on oil, possibly to guard against any disruptions to supply.
The US strategic petroleum reserve has been a particularly active buyer, and governments such as China and India have followed suit.
At the same time, traders in the futures and options markets have anticipated a tighter market by bidding up forward prices.
Analysts are now divided between those who believe prices will rise as summer continues, and those who say there is no fundamental justification for prices to remain high for long.