LONDON, Aug 19: World oil prices shot above $48 a barrel for the first time on Thursday as Shiite Muslim militia threatened to torch Iraqi oil fields. New York's benchmark light sweet crude for delivery in September spiked 93 cents to an all-time high $48.20 in early deals.

In London Brent North Sea crude for October delivery surged by as much as 77 cents to $43.80 per barrel in late afternoon trading. GNI-Man Financial trader Rob Laughlin said he was aware an Iraqi domestic pipeline was on fire but there are no reports of export pipelines being hit.

"If this were the case then prices would go over $50," he added. "There is talk about Sadr wanting to negotiate an end but there seems to be a lot of talk but nevertheless no action," said Laughlin.

Exports of crude from Iraq's southern oil terminals have been cut by half to around 40,000 barrels per hour for a week because of threats to infrastructure from Shiite Muslim militia, according to Southern Oil Company officials.

The financial troubles of Yukos, Russia's largest oil producer, were also still worrying traders. The US Energy Department meanwhile said on Wednesday crude oil inventories in the week to August 13 dropped 1.3 million barrels to 293.0 million.

Gasoline stocks declined 2.6 million barrels to 205.7 million. Distillates - mostly diesel and heating oil - climbed 2.1 million barrels to 124.6 million. Analysts at Lehman Brothers raised their oil price projections, hiking their 2005 forecast by 20 per cent to $35 per barrel of Brent. "The main reasons are higher demand and limited spare production capacity within Opec," they told clients. -AFP