LONDON, March 10: Oil prices hit a record high $107.85 on Monday as the White House announced that US Vice President Dick Cheney will head to Opec kingpin Saudi Arabia next week to seek increased production.

Dealers said oil had fallen in early trade on profit-taking but concerns over the weakness of the dollar and tightening supplies provided support and news of the Cheney trip then added an extra twist.

The New York contract for April delivery had hit a previous peak of $106.54 on Friday.

Elsewhere on Monday, Brent North Sea crude for April struck a record high $104.35 on barrel.

The latest spike came as the White House said Monday that Cheney would next week urge Saudi Arabia to push Opec to boost output in an effort to rein in sky-high prices.

“I’m sure that energy issues will come up,” spokeswoman Dana Perino said in a preview of Cheney’s trip to the Middle East next week. “Obviously we want to see an increase in production.”

The Organisation of the Petroleum Exporting Countries (Opec), which produces 40 per cent of the world’s crude, decided at a policy meeting last week to maintain its daily production target of 29.67 million barrels despite calls by US President George W. Bush for it to do more.

Opec blamed the high cost of crude on speculative buying as investors sought a hedge against a weakening dollar and rising inflation.

The weak US currency encourages demand for dollar-priced commodities like oil because it makes them cheaper for buyers using other currencies.

“Tight fundamentals remain the dominant force underpinning prices in our view, with the combination of disappointing non-Opec production, solid non-OECD demand and defensive Opec output policy all exerting upward pressure on prices,” said Barclays Capital analyst Kevin Norrish.

At about 1700 GMT, New York’s main oil contract, light sweet crude for delivery in April, stood at $107.54, up $2.39 from Friday’s close.

Brent for April stood $1.75 higher at $104.15.

Prices had dropped in early trade on Monday amid concerns that energy demand would drop in the United States because of its weak economy, analysts said.

Prices also fell on easing geopolitical tensions involving crude producer Venezuela, they added.—AFP