Oil charged to record highs today, bumping up against $50 a barrel and renewing concerns on financial markets about its impact on world economic growth.
European and Japanese stocks fell and the dollar gained on the yen. Bonds were flat.
Wall Street looked set to open lower on worries about high energy costs squeezing corporate profits.
The price of oil was driven higher by supply worries ahead of the northern hemisphere winter. New York crude went past its historic high to $49.42 and London Brent hit an all time high of $46.05 a barrel before dropping back to $45.90.
Worries about the stability of supplies from Iraq, Nigeria and Russia were compounded by concerns over low fuel stocks.
Economists have been concerned that the combination of tight supplies and high demand means that even a small event could send the oil price skywards, fuelling inflation and hurting consumer confidence.
A high price of oil is one of the chief risks cited by analysts and investment strategists to a scenario of slower but still robust world growth going into 2005.
Stocks fell in Europe and Japan. The FTSE Eurotop 300 index of pan-European blue chips was 0.7 per cent weaker and the narrower DJ Euro Stoxx 50 index lost 0.74 per cent. Earlier, Tokyo's Nikkei closed down 0.33 per cent, falling for a seventh straight session in its longest losing streak since December 2002.
The Nikkei average lost 35.84 points to 10,859.32, and the broader TOPIX index fell 0.65 per cent to 1,095.24. The dollar, meanwhile, rose to a six-week high against the yen as the Japanese currency was ground down by the weak stock market and high oil prices.
The euro also slipped. The dollar was up a third of a per cent at 111.81 yen. The euro lost 0.09 per cent to $1.2262, in the middle of a range it has held for several weeks. Bonds were flat. The 10-year Bund yield was at 3.963 per cent and the two-year Schatz at 2.588 per cent.