Oil prices jumped $2 to record highs near $120 a barrel this evening, mainly due to supply concerns from Nigeria and the North Sea.
US crude rose $1.90 to $119.38 after hitting an all-time peak of $119.74 earlier. London Brent crude gained $1.80 to $116.23 after rising to a record $116.75.
Oil's fresh highs have extended a rally that has seen prices climb more than five-fold since 2002, driven by booming demand from emerging markets such as China and long-term supply worries.
The slumping US dollar, which tumbled to fresh lows against the euro today, has also helped boost dollar-denominated commodities like oil and attracted speculative investment cash from hedge funds.
Pipeline attacks in OPEC member Nigeria last week shut 169,000 barrels per day (bpd) of production. Meanwhile, management and union officials are in talks to avoid a planned two-day strike at Scotland's Grangemouth refinery, which could force the shut-in of some oil and natural gas production from the North Sea.
Despite the supply worries, officials from oil cartel OPEC insist markets have enough crude. Ali al-Naimi, oil minister in Saudi Arabia, said a lack of investment in crude and refining capacity - not a lack of reserves - was driving prices higher.
Rising energy costs and the wider US economic crisis have forced analysts to revise downward oil demand growth forecasts for the world's largest consumer. But demand from emerging economies continues to rise. China's oil demand leapt 8% in March from a year ago, the fastest rate in 19 months as refiners boosted imports ahead of the Olympics.
