LONDON, Aug 27: Oil prices jumped above $118 on Wednesday as Tropical Storm Gustav posed a risk to US energy facilities and after a surprise drop to crude inventories in the United States, analysts said.

New York’s main contract, light sweet crude for delivery in October, climbed $2.13 to $118.40 a barrel.

London’s Brent North Sea crude for October rose $1.74 to $116.37.

“The potential threat of Tropical Storm Gustav to US oil and gas installations in the Gulf of Mexico continued to support” prices, Barclays Capital analyst Yingxi Yu said in London.

Faced with the threat of Gustav striking the Gulf of Mexico this weekend, energy giant Royal Dutch Shell said it had begun “evacuating personnel not essential to producing and drilling operations in the Gulf.”

On Wednesday, traders also digested the latest snapshot on the health of energy inventories in the United States, the biggest oil consuming nation.

The US Department of Energy said crude stockpiles had fallen by 100,000 barrels last week. Analysts had forecast a rise of 2.2 million barrels.

Oil prices were also being supported by heightened tensions between Russia and the West after Moscow recognised the Georgian separatist regions of South Ossetia and Abkhazia as independent.

Russia is the biggest oil producing country after recently overtaking Saudi Arabia.

Traders were additionally monitoring fresh violence in key crude producer Nigeria.

—AFP