US oil prices struck a fresh record high above $44 a barrel on Wednesday, on continuing concerns that any hiccup in the tightly stretched supply chain could lead to a major disruption in global crude flows.
US crude struck $44.28 a barrel, 13 cents up from Tuesday's settlement and the highest since oil futures were launched on the New York Mercantile Exchange in 1983. London's Brent crude was 18 cents higher at $40.82 a barrel.
Oil's latest boost was triggered on Tuesday, when the head of the Opec producers' cartel said there was no spare oil immediately available to cool red-hot prices. Opec President Purnomo Yusgiantoro said that Saudi Arabia, the world's biggest exporter, had spare production capacity but could not raise output immediately.
"The oil price is very high, it's crazy. There is no additional supply," Purnomo told reporters in Jakarta. Fears of a major glitch in the supply chain at a time when global oil demand is growing at the fastest pace in more than two decades were heightened by attacks on oil pipeline in Iraq.
Saboteurs on Tuesday blew up an oil pipeline that supplies Iraq's main refinery and feeds in to the main northern export line, it already closed for two months.
Iraqi exports of about 1.8 million barrels per day (bpd) were severely disrupted in May and June due to sabotage on key pipelines in the south of the country feeding the main oil terminal Basra.
"Opec's spare capacity is at a historic low level," said Tony Nunan, the manager at Mitsubishi Corp's international petroleum business. "Even if something that could disrupt oil exports, like the Iraq war and Venezuela's strike, happens again, Opec can't boost production immediately to offset it this time."
The relentless rise in oil prices has raised concerns about economic growth. The US government said on Tuesday that high energy prices helped push consumer spending to its biggest fall in nearly three years in June as shoppers cut back sharply on car purchases.
The data triggered a slide on Wall Street. Most Asian stock markets also fell on Wednesday, weighed down by fears that high oil will dent corporate profits.
Oil prices have risen by more than one-third since the end of 2003 on worries that accelerating global demand has left supplies tightly stretched with little leeway for disruption.
Allowing for inflation, prices are near the level hit during the 1973 oil embargo and just over half those during the oil price shock that followed the 1979 Iranian revolution.
The Organisation of the Petroleum Exporting Countries, excluding Iraq, lifted output in July to near the highest level in 25 years at 27.57 million bpd as record-high prices enabled members to pump close to full tilt, a Reuters survey showed.
Saudi Arabia, which made up most of the July increase, has said it would produce 9.5 million-bpd in August, just one million bpd below the country's full capacity. Oil traders are also nervous that strong demand is preventing global stocks from building ahead of peak winter demand.
The US Energy Information Administration (EIA) will release its weekly oil stocks report on Wednesday, which is expected to show declines in national crude and gasoline inventories although distillate stocks are forecast to rise. Distillate stocks, including key winter heating oil, were seen rising by 1.4 million barrels.
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