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Last Updated: Thursday, 11 August 2005, 12:10 GMT 13:10 UK
Oil prices return to record highs
Oil refinery
A number of US refineries have recently suffered problems
Supply bottlenecks and security fears are keeping up the pressure on oil prices, pushing the cost of a barrel above $66 for the first time on record.

US refinery outages mean stocks are tight at a time of high seasonal demand for gasoline.

US light, sweet crude touched $66 a barrel in New York trade before easing to $65.90, still $1 ahead on the day.

UK benchmark Brent crude passed $65 a barrel for the first time before settling at $65.08, up $1.09.

The refinery problems - some because of fires, others due to breakdowns - have helped reduce gasoline stocks in the US by 2.1 million barrels.

As a result, petrol prices are soaring.

US pumps are serving gasoline at as much as $2.50 a gallon as US light while UK petrol is close to 1 a litre.

Supply and demand

The new high of more than $65 a barrel in the price of oil futures on the Nymex exchange in New York, reached in Asian trading early on Thursday, is the highest on record since the contract began trading in 1983.

The Nymex price was a gain of 33 cents on Wednesday, during which oil prices rose 2.9%, while Brent crude had risen more than 3%.

The tight supply is only part of the story, an influential energy think tank says.

In its monthly oil market report, the Paris-based International Energy Agency said uncertainties about both politics and economics were helping underpin prices, up more than 50% since the start of this year.

On one hand, the high prices have failed to stem soaring demand - while members of the Opec oil producers' group are finding it increasingly difficult to boost production.

On the other, security fears persist - currently centred on Saudi Arabia and Iran.

Saudi Arabia, home to a quarter of estimated global oil reserves, is still high on the list of concerns, despite the reopening of US embassy buildings, closed earlier in the week after warnings of possible trouble.

But the UK and Australia are still telling travellers that attacks could be imminent and travellers should avoid the kingdom.

The new Iranian president, Mahmoud Ahmadinajad, has ordered that the seals on a uranium processing plant be broken.

The country is Opec's second-largest oil producer.

Hear why petrol prices could rise even further

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