NEW YORK, Oct 16: Oil thundered more than $2 higher to a new peak above $88 a barrel on Tuesday as investors eyeing supply concerns and tensions in northern Iraq extended the nine-dollar rally that started last week.

The administration of US President George W. Bush said prices were now too high for the world’s top oil consumer, which is already facing economic pressure from the meltdown in the sub-prime mortgage market.

“There is no doubt that energy prices are too high. They disproportionately hurt low-income families that have to spend so much of their money on energy,” said White House press secretary Dana Perino.

Oil prices, averaging $67 this year, are closing in on the inflation-adjusted high of $90.46 seen in 1980. Investors said the rally was supported by tensions between Turkey and Kurdish separatists in Iraq, world energy demand growth, tight inventories in consumer nations heading into winter and unprecedented weakness in the US dollar.—Reuters