Page last updated at 16:30 GMT, Friday, 9 May 2008 17:30 UK

Supply fears push oil beyond $126

Oil rig
Oil prices have risen relentlessly this year

Crude oil prices have hit yet another all-time high in New York, tipping beyond $126 a barrel.

Driven by surging demand and continuing supply fears, US light crude hit $126.20 in afternoon trade in New York, before falling to $124.78 a barrel.

Meanwhile, London's Brent crude also hit a fresh high of $125.68, before later falling below $125.

A report by Goldman Sachs has said the price of crude oil could reach $200 a barrel in as little as six months.

Despite the continuing rises in oil prices, producers group Opec reiterated its view on Thursday that supplies were adequate for the time being.

However, it has also said that $200 a barrel was a possibility in the future.

Chinese demand

Soaring global demand for oil is being led by China's continuing economic boom and, to a lesser extent, by India's rapid economic expansion.

Both are now increasingly competing with the US, the European Union and Japan for the lion's share of global oil production.

This additional demand comes at a time of continuing production problems in a number of oil-producing nations.

In the past week, production in Nigeria has been affected by attacks on pipelines by anti-government militants, while Iraqi exports have been hit by renewed cross-border raids by Turkish forces against Kurdish insurgents.

Oil prices are also rising as the key US summer driving season approaches.

Economists warn that continuing high oil prices will have an impact on the global economy, hitting growth and fuelling inflation.

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