Page last updated at 23:59 GMT, Monday, 21 April 2008 00:59 UK

Oil rises to yet another record

Oil rig
Analysts are warning that oil prices could continue to rise

Oil prices in London and New York have hit fresh highs as fears over supply problems continue to drive the market.

US light, sweet crude hit a new peak of $117.76 a barrel in US trading before settling at $117.48 while Brent crude peaked at $114.86 a barrel.

The impending closure of a large oil refinery in Scotland, ahead of strike by workers, worried traders as did yet more attacks on Nigerian pipelines.

The International Energy Agency (IEA) reiterated that prices were too high.

It said the recent surge in prices, driven by the prospect of supply disruptions and the weak dollar, was making life painful for developing nations that do not produce their own oil.

Pipeline attacks

A range of factors including the uncertain situation at Grangemouth - one of the largest refineries in the UK - and attacks by militants on pipelines in Nigeria spurred prices on.

If oil-producing countries were to maintain their current level of production, inventories would be replenished
Nobuo Tanaka, International Energy Agency

A Nigerian militant group claimed it had carried out two attacks on oil pipelines in the south of the country.

Royal Dutch Shell said on Monday that previous attacks on a pipeline in Nigeria last week would lead to a drop in production of about 169,000 barrels per day for shipments in April and May.

This means, the company said, that it will unable to honour its contractual obligations at the Bonny terminal in Nigeria's Delta region for these two months.

An incident involving a Japanese oil tanker off the coast of Yemen, which lost thousands of gallons of fuel following a reported rocket attack, also added to the market jitters.

Opec stance

Comments by Opec's president Chakib Khelil that the producers' body would not be prepared to raise quotas to try and curb the latest price spike also added momentum.

"Opec's assertion that an increase in its oil production will not help to bring down prices should be put to the test," the Centre for Global Energy Studies said.

Although concerned about current price levels, the IEA predicts prices will fall as the slowing of industrialised economies reduces demand for oil.

It predicts world oil demand will slow by an average of 300,000 barrels per day this year, primarily as a result of the economic slowdown in the US.

Nobuo Tanaka, the IEA's head, did not repeat his call to oil producing countries to increase production to try bring prices down from their record levels.

"If oil-producing countries were to maintain their current level of production, inventories would be replenished, " he said.

"That will lead to better-balanced fundamentals, assuming there are no unforeseen geopolitical events, leakages, accidents, hazardous weather or port strikes."

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