Fears over global supply drove Nymex crude oil futures to fresh record highs above $50 a barrel this morning after oil companies in Nigeria were warned to shut in anticipation of war.
Rebel groups fighting government forces in the Niger Delta yesterday warned oil companies operating there to shut down by Friday as they prepared for and "all-out war on the Nigerian state".
US light crude touched a high of $50.47 a barrel and is up nearly 55 per cent this year. At 9.35 a.m. the contract was trading at $50.10, up 46 cents. London's Brent crude set a new peak at $46.80 a barrel, before easing to $46.50, up 57 cents.
The threat to supplies from the world's seventh-largest exporter, comes with producers already pumping at full tilt to feed the fastest demand growth in 24 years.
Companies working in the delta which pumps all of Nigeria's 2.3 million barrels per day output shrugged off the threat. Nigeria's top foreign producer Royal Dutch/Shell said it saw no reason to stop oil operations. Shell has already cut 30,000 to 40,000 bpd due to security curbs, industry sources said.
Italy's Agip, a unit of ENI also said it does not plan to stop oil output. Even so, concern over Nigeria's supplies have compounded worries about supply security in Saudi Arabia, Iraq and Russia.
German Finance Minister Hans Eichel warned ahead of Friday's Group of Seven meeting in Washington that global growth would be at risk if oil prices remained at current levels.
In real terms, stripping out the impact of inflation, oil prices are now near levels hit during the Arab oil embargo of 1973-4, though much lower than the record $80 annual average high following the 1979 Iranian revolution .
European Union Energy Commissioner Loyola de Palacio said the pressure on prices would ease after the US presidential election in November.
"I think clearly there is pressure because of the American elections," Mr de Palacio said.
OPEC, which controls more than half of global crude exports, is producing about 30 million bpd, levels not seen since the late 1970s.