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Last Updated: Friday, 12 October 2007, 22:41 GMT 23:41 UK
Oil surges to $84 for first time
Oil plant in Bahrain
There is much debate over whether the oil price will rise or fall
Oil prices have reached another record - surging past $84 a barrel for the first time.

US sweet, light crude jumped as much as 97 cents to trade briefly at $84.05 a barrel in New York on supply fears before falling back to $83.69.

Fears that world energy supplies will reach critical levels this winter rose on low US crude stockpiles and fears that supply from Iraq could be hit.

London Brent Crude jumped 40 cents to trade at $80.55.

There are mounting concerns that Turkey could invade the north of Iraq imminently to target the Kurdistan Workers Party after a number of rebel attacks that have killed 15 Turkish soldiers since Sunday.

Iraq has the world's third largest oil reserves after Saudi Arabia and Iran and some of its largest oil fields are in the north of the country, near its border with Turkey.

But many analysts doubted that the supply of oil would be affected even if Turkey does get parliamentary approval for a cross-border military operation to hunt down rebels.

Instead, they believed that rising tensions in the region encouraged commodity traders to bid up the oil price, which jumped on Thursday after it emerged that US crude oil stockpiles fell last week.

Supply crunch?

The US department of energy said US crude oil stocks fell by 1.7 million barrels, in contrast to analyst expectations for a rise.

This takes crude inventories in the US to their lowest level since January as the weather turns colder and demand for heating oil increases, a report by the US Energy Information Administration showed.

The Organisation of the Petroleum Exporting Countries (Opec) agreed in September to boost crude supplies by 500,000 barrels a day starting in November.

But there is much debate over whether the increase will be sufficient to cater for demand levels in the winter months.

This has led to huge swings in the oil price this week with US sweet, light crude dropping $2.20 on Monday to $79.02 a barrel, while London Brent fell to $76.58 a barrel, down $2.32.

Both measures have been chased up since then.

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