Further fuel hikes likely after oil prices jump

Further hikes in the price of petrol and other fuels look all but inevitable following a jump in oil prices of almost $2 a barrel yesterday.

Anxiety over supplies from producer countries Iran and Nigeria drove US crude oil prices to $68.70, their highest levels since Hurricane Katrina and analysts predicted the market would stay strong for the foreseeable future.

Mr Tom Noonan, chief executive of the Maxol Group, said retial prices would have to rise.

"There is no doubt now, with the news as it is, that there will be a problem, prices will go up. How far depends on how much instability there is in all these areas where there is instability. So it is more of a political question," he said.

Maxol, which controls 13 per cent of the Irish market, changes its prices weekly. "It is certain that the price of crude will work its way through to the petrol pumps," said Mr Noonan.

According to the AA, the average retail price of a litre of petrol is 105.2 cent, compared to 94.8 cent a year ago.

In Nigeria, the world's eighth largest oil exporter, more than 220,000 barrels per day of crude have already been shut in and militants yesterday warned they would soon resume attacks on oil producers in the country.

There is also no sign of an easy solution to the West's dispute with Iran, the world's fourth biggest exporter.

Iran faces referral to the UN Security Council over concerns it is seeking to build an atomic bomb.

Iran has denied the charge and analysts fear it might hold back crude exports in response to any punishment from the West.

Yesterday, a senior official said Iran was transferring assets from European accounts to other foreign banks in an attempt to preempt possible UN sanctions.

Adding to investor concern, Russia has cut natural gas supplies to Europe and trimmed some oil production because of extreme cold weather at home.

Expectations that supply problems will support prices for the foreseeable future are reflected in record values for oil to be delivered in the months and years ahead.

On the New York Mercantile Exchange this week, contracts as far out as 2012 hit record levels and monthly contracts from June 2006 to June 2007 have risen above $690.

(Additional reporting: Reuters)