Price of oil hits 14-year high

THE price of oil neared a 14-year high of $40 per barrel yesterday, heightening fears that forecourt prices will rise in the coming weeks.

Oil futures, traded in New York, hit $40 amid further concerns about the security situation in Iraq and the fear that the recent surge in violence in the country will destabilise production. Iraq holds the world's second largest proven oil reserves.

US light crude prices have been soaring in the past year and yesterday hit their highest since October 1990 the height of the first Gulf War. It later eased to $39.58, 21 cents higher on the day. In London, the June Brent crude-oil futures contract was up 37 cents, or 1%, at $36.90 a barrel on the International Petroleum Exchange. Brent oil reached $37.20 yesterday.

The continued strength of oil prices, which will soon feed into the pockets of drivers, as well as business, will increase pressure on OPEC, the cartel of oil producing nations, to increase production. In the past, it has been fearful of increasing production to ease short-term fears about prices. The outlook is for continued high prices, though so far the price at the pump has been cushioned by the weakness of the dollar.