Saudi Arabia was yesterday forced to pledge an increase in the supply of crude as threats to production around the globe pushed the price of oil to within three dollars of the all-time high reached after Hurricane Katrina last August.

Amid concerns that the renewed increase in the cost of energy could affect growth in the world economy, the oil cartel Opec also sought to calm the markets by emphasising that it had no plans to limit output at its meeting due to be held in Vienna at the end of the month.

The announcements came as the cutting of gas supplies from Russia to Georgia intensified concern over the vulnerability of supply triggered by Iran's nuclear stand-off with the West, a shutdown of production in Nigeria and continuing sabotage threats to Iraq's oil facilities.

Prices surged to more than $69 (€56.05) in east Asian trading yesterday, but later slipped back after the reassurance given to the market by the world's biggest producer.

Oil futures fell in New York, with crude for March delivery down by 38 cents to $68.10. Brent crude was trading at just over $66 a barrel in London, down 34c.

"Fundamentals today are in excellent shape and inventories are at reasonable levels, supply plentiful, demand is well-met by supply," said the Saudi oil minister, Ali al-Naimi.

"There is no reason why prices should be rising - other than these tensions [over Nigeria and Iran]," the minister said.