Oil prices jumped to a new peak near $114 a barrel on Tuesday amid lingering supply worries and weakness in the U.S. dollar, deepening concern in world consumer nations that a spike in energy costs could cause severe economic damage.
Britain's prime minister, Gordon Brown, on Tuesday called on OPEC members to boost production to counter rapidly rising oil prices, which have shot up 80 percent since a year ago, adding his voice to similar requests from the administration of U.S. President George W. Bush.
"We are not producing enough oil ... and we can take collective action to persuade OPEC and others to get the oil price down," Brown said in an interview on Sky Television. U.S. crude rose $1.80 to $113.56 a barrel by 1735 GMT, after touching a record high of $113.93. Oil is up about 18 percent from the start of the year and more than 80 percent since last April.
London Brent crude was up $1.73 at $111.57, after hitting a record high of $111.85. Oil and other commodities have rallied in recent months due to record weakness in the U.S. dollar.
A weak dollar tends to raise prices for commodities denominated in that currency by boosting non-U.S. spending power and by attracting investors seeking an inflation hedge. "One thing that is clearly driving the oil price is that the U.S. dollar has gotten substantially weaker in the past several months and quarter," said Richard Batty, energy analyst at Standard Life.
The dollar recouped some losses versus the euro Tuesday after U.S. Treasury data showed foreigners increased purchases of U.S. assets in February. Oil dealers said they were also closely monitoring oil shipments from Mexico, the world's 10th-largest crude exporter, after foul weather interrupted operations at its three main oil ports over the weekend.
The Mexican government said on Tuesday that two of the ports had reopened, but one remained shut for the third straight day. Adding to worries over tight supply, Chinese data Tuesday showed imports of diesel zoomed 49 percent higher in March. China's March crude oil imports also rose sharply, according to data released last week.
Despite surging oil prices, OPEC has said it is producing enough and that a U.S. economic slowdown may weaken consumption in the second quarter. "Current OPEC production at more than 32 million barrels per day will be sufficient to both meet demand growth and contribute to further stockbuilds," the Organization of the Petroleum Exporting Countries said in its latest Monthly Oil Market Report. OPEC, which pumps more than a third of the world's oil, has pointed to U.S. dollar weakness, speculative inflows and political tensions as key factors driving prices rather than a lack of oil. OPEC oil exports dipped 870,000 barrels per day in March, according to data released Tuesday by Lloyd's Marine Intelligence Unit.