Oil prices climbed further on Monday, surging to a new record on concerns that demand will outstrip supply.
Consumers still fill up despite a 60% oil price jump in the past year
US sweet light crude closed up 70 cents at $60.54, having touched a high of $60.95 while Brent, the other main contract, rose 94 cents to $59.30.
Analysts said that prices are likely to sit close to the $60 mark for some time as demand shows little sign of abating.
Also driving gains were concerns of a clash between Iran's newly elected President and the US.
Mahmoud Ahmadinejad has vowed to continue Iran's nuclear programme, already a source of major tension with the United States.
Experts said concerns over a more hardline outlook in Tehran would fuel concerns over supply shortages, particularly if the new president chose to reform the country's oil sector.
Iran, a leading member of Opec, has struggled to increase production because of limits on foreign investment.
"We don't know in practice yet what Ahmadinejad means for foreign oil policy or Iran's role in Opec," Mehdi Varzi, an Iranian oil consultant, told Reuters.
"But there could well be months of uncertainty which will further delay progress on production capacity."
Also driving the market is the worry that there is very little surplus supply and that any disruption would produce a sudden and dramatic spike in prices.
Already during the past 12 months, the price of crude has jumped by almost two-thirds, though the extra costs have done little to diminish demand.
Developing economies such as China and India continue to stoke their booms with oil, while consumers are still filling up their cars with petrol and diesel.
Oil production group Opec has been repeatedly called upon to increase the amount of oil it pumps and recently responded by increasing its production ceiling by 500,000 barrels a day.
The group has said that it is doing all it can to cool oil prices.
"The psychology of the market is that once $60 is breached, then there is tendency to test how much higher it can go, or how long $60 can be sustained," said Victor Shum of Purvin & Gertz.
"There's a lot of speculative activity. It is a red-hot market."
President of Opec and Kuwait's oil minister Sheikh Ahmad al-Fahd al-Sabah said over the weekend that the organisation had already started to discuss another rise in output levels.
Driving the market is the worry that there is very little surplus supply and that any disruption would produce a sudden and dramatic spike in prices.