Oil prices hit fresh record highs today as US-led forces moved to crush a rebellion in the holy Iraqi city of Najaf.
US light crude rose 33 cents to $45.13 a barrel, the highest price in 21 years of trade on the New York Mercantile Exchange. London's Brent crude futures rose 43 cents to hit a new peak of $42.00.
Iraq's oil exports have run at half normal levels for the last four days as an uprising by an anti-US cleric threatens infrastructure in southern production centres.
US marines began a major offensive in Najaf today to root out militiamen loyal to Shia Muslim cleric Moqtada al-Sadr. Sadr's militia has threatened to blow up oil pipelines if US forces storm Najaf.
A late Monday pipeline sabotage attack has already cut loadings from Iraq's two offshore Gulf terminals, which account for all the country's exports, to 960,000 barrels per day compared with 1.9 million normally. Iraqi officials hoped to resume full exports later today.
Fears that tightly stretched supplies have left little leeway for any disruptions have added 19 per cent, or $7, to a barrel of crude oil since the end of June.