Oil prices hit a record high of $75.78 a barrel today, boosted by strong demand in the US and global tension ranging from Iran's nuclear work to North Korea's missile tests.
Oil in New York is up 23 per cent this year because of supply cuts in Nigeria, the dispute over Iran's nuclear programme and a flood of investment fund money into commodities.
"Nigeria, Iran, Iraq, and now North Korea continue to ensure that the markets remain supported by geopolitical factors," analysts at Citigroup said in a report.
Adjusted for inflation, oil is more expensive than at any time since 1980, the year after the Iranian revolution.
"In the very near term, it's hard to see the oil price coming down appreciably," said David Dugdale of MFC Global Investment Management.
The US uses 40 per cent of the world's gasoline and a quarter of its crude oil supply.
Rebel attacks in Nigeria have shut almost a quarter of the country's output and the Iranian nuclear row has raised fears of supply cuts from the world's fourth-largest exporter.
Oil has rallied from below $20 at the start of 2002, driven by rising global demand led by the US and China that has stretched oil producers and refiners.
Opec the producer group which pumps more than a third of the world's oil, has been powerless to stem the surge in prices, blaming a lack of investment in new refineries.
Growing demand and a strain on supply suggest that strong oil prices are here to stay unless a recession leads to a collapse in demand, investors say.
"High oil prices are now a permanent feature because of the rapid industrialisation of Asia, particularly China," Henderson Investors' Tony Dolphin said.
"Their growth of demand is going to steadily increase and OPEC and other oil producers are going to struggle to keep up with it."