Oil surged to a record high above $72 today amid concern that Iran's nuclear stand-off with the West could cut oil exports from the world's fourth-largest crude exporter.
In London, North Sea Brent crude oil jumped $1.18 to an all-time high of $72.64 a barrel as Iran and the West exchanged increasingly sharp words over the Islamic Republic's determination to push ahead with a nuclear programme.
US crude oil climbed to $71.60, smashing through its previous record of $70.85.
"The Iranian situation is making us all very nervous. . . . We don't seem to be getting anywhere on the diplomatic solutions," said Deborah White, an analyst at SGCIB in Paris.
With almost a quarter of Nigerian oil production still shut after rebel attacks two months ago, oil consumers feel almost as vulnerable as they did during the Arab oil embargo in the 1970s.
Oil prices have soared from $20 at the start of 2002 and are now nearing the inflation-adjusted peaks of over $80 hit in 1980, the year after the Iranian revolution.
Initially fired by strong demand from the United States and the fast-growing economies of China and India, the rise has accelerated over the past year on worries over supplies.
Iraq's once significant oil industry is in crisis, Nigerian exports have been slashed by rebel attacks on the world's eighth-biggest exporter, and consumers are worried that Iran's exports could fall victim to its nuclear dispute with the West.
The rally has also been aided by big investment funds putting their money into commodities in the hope of higher returns than they get from equities or bonds.
Ministers from the Organization of the Petroleum Exporting Countries, who will gather informally this weekend during an International Energy Forum meeting in Doha, have said there is nothing more the group can do to bring down prices.
A senior Opec delegate said today the group considered current prices too high and that they had nothing to do with the realities of supply and demand.