THE producers' cartel that governs world oil supplies last night admitted it had lost control of the latest price rise as oil bubbled back up to near-record highs.
US light crude gained 15 cents to $41.65 a barrel, just shy of last Friday's all-time high of $41.85, while on the London market, North Sea Brent jumped by 18 cents to $38.08 a barrel.
Markets again fell as nerves continued to jangle over the soaring oil prices, which dealers fear could lead to interest rate rises in order to curb inflationary pressures. The FTSE 100 index closed down 43.1 points, or 1%, at 4428.7. US, European and Asian markets also fell.
Struggling to cope with growth in fuel demand fired by world economic growth, Opec, producing about half of the world's crude oil output, admitted it could do little to douse prices, now up more than 25% so far this year.
Opec's president, Purnomo Yusgiantoro, blamed low stocks in America and speculators betting on increased oil prices. He admitted: "While the oil market still holds above $40 a barrel ... that is due to factors beyond Opec's scope."
Tomorrow, Opec members will meet informally in Amsterdam to discuss increasing output in the hope of bringing prices down. Saudi Arabia appears to have convinced some members to agree to a 6% increase, an extra 1.5 million barrels a day.
Calls for upping production have come from the G8 industrialised countries, whose foreign ministers will increase the pressure on Opec this weekend when they meet in New York.
Loyola de Palacio, EU energy commissioner, insisted there was an urgent need for more output. She said the global economy would bear a very heavy cost unless prices were lowered and the issue was a question of credibility for Opec.
On Wednesday, Gordon Brown made Britain's position clear. The chancellor said: "We are consulting with Opec on the recent rise in oil prices and urging them to raise oil production to meet world demand at the prices they themselves have said are sustainable."
Opec's preferred price range is between $22 and $28 a barrel. However, the prospect of it turning on the taps for an extra 1.5 million barrels a day is failing to convince traders that it will make much difference to prices, pointing out that Opec is already pumping out more than two million barrels a day above its official 23.5 million limit.
Spare cartel capacity is estimated at about 2.5 million barrels per day, limited mostly to Saudi Arabia.
Analysts agree the key factor pushing prices up is low US petrol stocks as the summer driving season begins. World consumption is due to peak in the fourth quarter of 2004, with rising winter demand. One analyst said: "If markets are this nervous about supply when global demand is at a low, the prospects look fairly grim for when demand moves towards its seasonal high."