Oil prices shot to record highs on Thursday 22 May peaking at above $135 (85.77).
Brent North Sea oil hit an all-time high of $135.14 and New York light sweet crude reached a record $135.09 on Thursday, driven by increasing concerns that energy supplies will fail to keep up with demand.
Prices later declined as investors banked profits. 'It seems there is no stopping soaring oil prices,' Andrey Kryuchenkov at the Sucden brokerage in London says. 'Investors doubt that the market will be able to meet ever growing demand in the long run, with booming emerging market economies underpinning robust demand for energy.'
Crude futures have risen by more than a third since the beginning of 2008 when they struck $100 for the first time, encouraged by unrest in oil-producing countries, falling energy inventories, Organization of the Petroleum Exporting Countries' (OPEC) unwillingness to improve output, high Asian demand for fuel and a weak dollar. A struggling US currency makes dollar-commodities cheaper for foreign buyers.
Oil prices breached $130 for the first time on Wednesday 21 May.
Abdalla Salem El-Badri, the secretary general of OPEC, says that the cartel's members were unhappy with surging prices, which he blamed on speculators and a weak dollar. OPEC, which produces 40% of the world's oil, is reluctant to bend to US-led demands for it to pump more crude to help douse high prices.
The 13-nation cartel insists that the market is well supplied and that record prices reflect speculative investment activity rather than actual supply and demand conditions.