US oil prices leapt to a record $42 a barrel this afternoon after an attack in Saudi Arabia by Islamic militants killed 22 people, heightening fears about political instability in the world's biggest oil exporter.
US light crude rose $2.12, more than five per cent, to touch $42 a barrel following an attack by suspected al Qaeda militants on the offices of Western companies in the Saudi oil city of Khobar on Saturday.
That was the highest seen in 21 years of crude trading on the New York Mercantile Exchange.
London Brent crude rose $2.07 to $38.65 a barrel.
Traders fear the attack could be the start of a concerted al Qaeda offensive to disrupt Saudi supplies at a time when oil prices are already high enough to threaten world economic growth.
Kuwait's oil minister said today his country was stepping up oil installation security and was co-ordinating with fellow Gulf producers to protect against attacks.
Ministers from OPEC meet on Thursday in Beirut where they are expected to agree a rise in crude supply limits of up to 2.5 million barrels per day (bpd), 11 percent.
But Iranian Oil Minister Bijan Zanganeh warned that higher quotas may not deflate prices.
OPEC is already pumping more than two million bpd above its existing formal ceiling of 23.5 million bpd, so most extra supply will have to come from Saudi Arabia.
The only producer with significant spare capacity, Saudi has already vowed to lift output this month about 10 percent to nine million barrels daily, irrespective of cartel quotas.
Kuwait said on Monday it had ramped up production by 150,000 bpd to 2.35 million bpd.