Oil prices hit new highs as Gulf tensions rise

Oil prices hit fresh 13-year highs yesterday amid fears over violence in the Middle East and supply shortages in the West.

Oil prices hit fresh 13-year highs yesterday amid fears over violence in the Middle East and supply shortages in the West.

In London, Brent crude rose 74 cents to $36.67 a barrel, its highest since October 1990, shortly after Iraq's invasion of Kuwait led to the first Gulf War. In the US, petrol prices set a new all-time high of $1.315 a gallon as crude prices rose to within a whisker of the $40-a-barrel mark.

Oil jumped 4.3 per cent in the past two days in New York, after five foreign oil workers were killed in Saudi Arabia, the world's biggest oil exporter, on Saturday. The previous weekend, suicide bombers attacked Iraq's main offshore oil-loading platform for supertankers.

"Violence in the Middle East specifically targeting oil assets has raised the bar with regards to the fear of supply disruption," said Josh Sadler, an energy analyst with Société Générale.

Weekly data on petrol stocks in the US appeared to provide some comfort for dealers worried about a summer supply crunch at American forecourts.

The Energy Information Administration said stocks rose 4 million barrels to 204 million barrels in the week to 30 April, above forecasts for a 1.5-million-barrel stockbuild.

But traders said they remained worried that inventories may not build sufficiently to meet peak summer demand.