LONDON, May 6: World oil prices soared to fresh 13-year highs on Thursday, nearing $40 in New York on fears of terrorist attacks on Middle East oil facilities and US gasoline shortages, traders said.
New York's reference light sweet crude June contract climbed to as high as $39.97, within a whisker of the symbolic $40 threshold which has not been breached since October 1990 after Iraqi troops invaded Kuwait.
In London the price of benchmark Brent North Sea crude oil for June delivery reached a new 13-year zenith of $37.20. In late deals prices traded 27 cents lower at $36.45 in choppy trading.
Fears of terrorist attacks on oil installations in the Middle East, particularly in Saudi Arabia, were preying on traders' minds.
"In the last two weeks, we have seen terrorist activity in Iraq and Saudi Arabia which has been very close to affecting supply from those two very important Middle East countries," said Prudential Bache broker Tony Machacek.
"While the terrorist threat continues, prices are going to remain very, very strong," he added.
Traders also fretted about the risk of shortages of gasoline supplies in the United States ahead of the so-called US "summer driving" season when American holiday makers take to the roads.
"We are only a few couple of weeks away from the psychological start of the traditional driving season in the States ... That's why there is particular concern about gasoline supplies," Machacek said.
In Paris, the chief of the International Energy Agency, Claude Mandil, warned: "A new oil shock - that is to say prices which climb in coming weeks to the point of compromising a global economic recovery - is possible."
British Prime Minister Tony Blair meanwhile said his government was taking a "very keen interest" in rising oil prices, which he said could have a damaging economic impact.
"This is something we discuss, obviously, with allies and partners and the oil producing countries because we've learnt from history that it can have a severe impact on our economy, quite apart from the consumer," he said.
OPEC president Purnomo Yusgiantoro said that the cartel was considering the possibility of raising its output quotas in a bid to calm the market.
"I am in communication with the Opec Secretariat and we are still studying this possibility," the Opec chief, who is also the Indonesian oil minister, was quoted as saying in the Jakarta Post's online edition.
"We have to determine the cause of the high prices. We want to assure the market there is enough supply," Purnomo added. -AFP
