Oil prices surge to record high

Updated 08.28 Fri Jun 27 2008

Keywords: OPEC, petrol, oil

Oil prices have eased slightly after hitting a record high thanks to a near 4 per cent surge overnight.

US oil hit $140.39 a barrel after Libya said it was studying possible cuts in output in response to potential US actions against Opec countries.

"I forecast prices probably between $150 and $170 during this summer. That will perhaps ease towards the end of the year" - Opec President Chakib Khelil

Prices have since eased to just over $139 a barrel.

Crude has surged 45 per cent so far this year, on supply disruptions and geopolitical tensions in the Middle East. Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have also added to gains.

The result has been increased costs for businesses, consumers and governments and headaches for central banks struggling to balance rising global inflation with economic sluggishness.

Opec President Chakib Khelil said that prices could reach $170 a barrel in the coming months, and he reiterated the cartel's position that speculation - not a supply problem - was driving oil to new highs.

"I forecast prices probably between $150 and $170 during this summer. That will perhaps ease towards the end of the year," he said.