Oil hits record near $127 as Iran mulls output cut

Oil surged to a record peak near $127 on Tuesday after OPEC producer Iran said it was studying a plan to cut output despite signs record-high prices are hurting consumer nations. U.S. crude jumped $2.00 to $126.23 a barrel by 1:45 p.m. EDT (1745 GMT), after striking a record $126.98 earlier.

London Brent crude rose $1.61 to $124.52 a barrel. President Mahmoud Ahmadinejad said a proposal to reduce Iran's crude output was being reviewed by experts, the semi-official Fars News Agency reported. "There has been such a proposal and it is under expert review,"

Fars quoted Ahmadinejad as saying when asked about the possibility of the world's No. 4 producer reducing output. Iranian Oil Minister Gholamhossein Nozari earlier said Iran was reviewing how much oil it pumps, but no decision had been taken on any changes. "We're in a market where anything bullish is going to be able to push the price higher," said Peter Beutel, president of Cameron Hanover.

Further support came from tight global supplies of distillate fuels such as diesel after a snag at the Grangemouth refiner in Scotland. European middle distillate stocks fell sharply in April, down 1.4 percent from March and 7.2 percent lower than a year ago, data from industry monitors Euroilstock showed.