Oil prices moved a step closer to the $100 a barrel mark yesterday as supply disruptions in Mexico, the weak dollar and the threat of attacks on oil facilities in Sudan pushed crude to another record high.

US light crude soared to $93.80 a barrel before settling at $93.53, up 67 cents. In London, Brent crude reached a milestone by powering through the $90 mark to strike a record of $90.50.

Dealers said investors were increasingly focused on $100 a barrel and added that a widely expected cut in interest rates by the US Federal Reserve tomorrow could fuel yet more buying given the prospect of further falls in the US dollar. Dollar weakness has boosted the price of dollar-denominated commodities and helped oil to surge by more than a third since the middle of August. It has risen more than 50 per cent this year.

Yesterday, analysts again blamed continuing tension over potential conflict in Iran for the strength of oil given fears of a supply crunch ahead of the seasonal upswing in demand next month. 

Rebel soldiers in the conflict-torn Darfur region also raised the prospect of supply disruptions in Sudan. The Justice and Equality Movement (JEM) last week kidnapped five oil workers and yesterday warned of more attacks unless oil companies operating in the country left within the week.

Mahamat Bahar Ali Hamadein, a senior commander at JEM, said: “If they do not leave they will all become targets for us just as the Sudanese military is because they are supporting our enemy.” Sudan produces about 500,000 barrels of oil a day, with 60 per cent going to China.

The Opec oil cartel is due to increase its production by 500,000 barrels a day from November 1 and has insisted that it does not see a case for any further increase.

Abdullah al-Attiyah, the Qatari oil minister, yesterday reiterated Opec’s belief that the current oil bubble had more to do with speculators driving the price higher than any supply shortfall. He said: “I haven’t any signal that there is any shortage of crude . . . I believe a big portion of the oil price today is related to geopolitics and fear factors. We cannot solve it. Sometimes there is a shortage of oil products but not of crude. This is because of limitations of refinery . Consumers and producers should invest more in refining. We don’t have a magic stick to solve this.”

One senior oil executive said that the price of oil was “madness”. “I still believe the oil price should start with a six,” he said. “ I thought it was a bit racey at seven. It’s just bizarre.”

Petrol prices in the UK are expected to reach record highs later this week. Unleaded averaged 98.44p per litre over the weekend, just below last year’s record of 98.54p.

Max Petroleum, the oil and gas explorer, yesterday revealed that its former chief executive had been at the centre of a boardroom share option scandal, as it explained the reasons for his dismissal two weeks ago. Shares in the group fell by 13 per cent, or 14.25p to 96p, in the first day of trading since the stock was suspended last month.

Source: Times Online