Oil prices struck a new record high yesterday on simmering concern that rapid fuel demand growth will outpace global supplies at a time when traders fear a sabotage attack on the Middle East oil infrastructure.
US light crude reached $41.85 a barrel, the highest price since the New York Mercantile Exchange launched the crude contract in 1983. London's Brent crude climbed 34 cents to $38.20 a barrel.
"Given the current situation, one can scarcely see what, short of an external intervention, could make short-term prices go down," said Societe Generale economist Frederic Lasserre.
"The short term is dominated by low gasoline stocks in the United States and Europe and deterioration of the Middle East situation. Neither is likely to change much in the months to come," said Mr Lasserre.
Low US gasoline inventories ahead of peak demand in the summer months, a surge in global consumption driven by healthy economic growth and worries that instability in the Middle East may disrupt supplies have driven crude prices up $9 a barrel, or 28 per cent, since the end of last year.
The United States has led consumer countries' calls on the Opec producer cartel to release more supply as fears gather of inflation and a slowdown in economic growth.
Opec, which controls half of world crude exports will convene informally later this week on the sidelines of an Amsterdam conference and again in Beirut on June 3 for a full ministerial meeting.
Ministers will discuss a proposal from Saudi Arabia to raise the group's official production limits by at least 1.5 million bpd to cool prices.
Opec President Purnomo Yusgiantoro said yesterday the cartel was unhappy by such high oil prices. "High oil prices can cause recession. We are not happy with high oil prices," said Mr Purnomo, who is also Indonesia's oil minister.
Even so, oil dealers are sceptical Opec has enough spare production capacity to bring prices down as most Opec countries, except top exporter Saudi Arabia, are producing flat out.
The group is currently pumping more than two million bpd above its official production ceiling of 23.5 million bpd to feed demand, which has been especially strong in China and the United States.