Oil prices have hit a record high of $71.60 a barrel, fuelled by growing fears over Iran's nuclear standoff with the international community.
Traders are worried about instability in Iran and Nigeria
US light, sweet crude rose by more than $1 in New York trade, passing last year's previous high of $70.85 reached after Hurricane Katrina.
Prices have risen 16% in the past month as Iran's nuclear row has worsened and Nigerian supplies have been disrupted.
Brent crude also hit a new record of $72.64 a barrel in London trade.
US crude eventually settled up at $71.35, an increase of 95 cents from Monday's closing price.
Analysts said that prices would continue to head upwards as long as Iran's dispute with the international community over its nuclear intentions remained unresolved.
"We have broken new ground today," said Victor Shum, an energy analyst with Singapore-based Purvin & Getz.
"The market sentiment is bullish, with yesterday's record closing, momentum has been built up to cause a wave of buying."
Militia violence in Nigeria, which has led to the suspension of 25% of its output, has also forced prices upwards in recent weeks.
Over the past month, prices have gained more than $10, or 16%.
Global demand for oil remains intense, particularly in the run-up to the US driving season, while available supplies remain tight.
"The basic thing underlying the industry is that global demand remains very strong," said Tobin Gorey, commodities strategist with the Commonwealth Bank of Australia.
Countries in the Opec oil producers' cartel have admitted there is little they can do to quell the rise in prices.