THE PRICE of crude oil hit a new high of just under $140 a barrel yesterday, despite a pledge by the King of Saudi Arabia to increase output in the next month.
The cost of US light crude rose to $139.89 a barrel, surpassing the previous high of $139.12 set on June 6 this year.
The new high immediately had experts looking ahead to how soon it would be before oil hit $200 a barrel – with some expecting th
at landmark figure to be reached within 18 months.
Global oil prices have now doubled since last year, and have quadrupled since 2003. Just a decade ago, oil cost $10 a barrel.
The price rise came despite an earlier announcement by King Abdullah of Saudi Arabia that his country would boost production by 200,000 barrels to 9.7 million barrels a day next month, in order to meet growing worldwide demand.
That increase would mean the Saudis will have increased production by six per cent, or 550,000 barrels a day, since May and would put the nation at its highest monthly oil production rate since August 1981.
The country is thought to be able to pump substantially more crude, and analysts suggest it is capable of producing 2m barrels a day more than it does currently.
The increase was not expected to be large enough to have a significant impact on the market for oil because of the continuing global demand, particularly from developing countries.
Richard Savage, head of energy research for Swiss bank Mirabaud, said: "This increase will not help bring prices down. If anything it has made people slightly nervous because the rise is so small that it makes you wonder how close to capacity the Saudis now are. There is a sense of 'Is this all they can really do?'"
He added that prices were only likely to fall if there was a reduction in demand, particularly from China.
The news of oil prices hitting a new high came as the dispute between BP and its Russian partner over the future of TNK-BP, Russia's third largest oil producer, hit a new low.
Mikhail Fridman, the billionaire chairman of TNK-BP accused Peter Sutherland, the UK oil giant's chairman, of using Nazi propaganda tactics.
Both sides are fighting for total control over the joint venture, and Mr Sutherland had accused the Russian shareholders of returning to the 1990s-style "corporate raiding".
This followed police raids on BP's Moscow office, visa application problems and threats to revoke BP's oilfield operating licences in the region.
Mr Fridman hit back, saying Mr Sutherland was using "Goebbels propaganda" in his attempts to smear the Russian oligarchs.
He has also threatened legal action to remove TNK-BP chief executive Bob Dudley, who he says is acting in the interests of BP rather than both parties.
