Oil prices have climbed to within a cent of a record close in New York, raising concerns about the effect of higher energy costs on inflation.
High oil prices push up the cost of energy and petrol
The surge is particularly worrying as the threat of interest rate increases are shaking global stock markets and fanning fears about a credit crunch.
In New York, crude closed at $77.02 a barrel, just below the $77.03 record set on 14 July 2006.
Analysts said that oil prices could keep rising next week.
"We've got a highly charged market here, and it doesn't take much of a headline to spark a 5% price move," said oil analyst Jim Ritterbusch.
Oil prices were boosted by a report from the Commerce Department that showed US economic growth was a quicker-than-expected 3.4% in the three months to the end of June.
That pushed expectations about demand levels higher and saw traders buying up oil contracts.
In London, Brent crude gained $1.08 to close at $76.26 a barrel.
The price of oil has been higher still than the closing levels, and in July of last year a barrel of crude briefly touched $78.40 in New York before falling back.
Some analysts are predicting that strong demand and a failure by Opec, the powerful group of oil producing nations, to lift output could see the price of crude surge to new heights and could even push it close to the $100 mark.
However, other traders warn that much of the heat in the price is from traders buying into a rising market in the hope of making profits.
"The current prices are being driven by speculation rather than physical issues," said Kyle Cooper of IAF Advisors.
Should that be the case, then oil prices could fall almost as quickly as they have climbed.
James Cordier of Liberty Trading Group said he expected oil to be back near $60 a barrel in the autumn.