Oil surges to a new high

Stock markets are expected to come under more pressure after oil prices surged to a new record above $146 a barrel.

Brent crude for August delivery traded on the London-based ICE Futures Exchange reached $146.69 before easing back slightly.

The latest spike comes on a combination of concerns over a weak US dollar, surging oil demand and fears about supply disruptions in the Middle East and Africa.

Global oil prices have doubled over the past year and are up by 45 per cent since the start of 2008.

Light, sweet crude being traded on the New York Mercantile Exchange was also at record highs overnight, peaking at $144.57 a barrel before settling back marginally.

The commodity's latest surge also comes amid escalating tensions between the US and Iran.

Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the US. About 40 per cent of the world's tanker traffic passes through the Middle Eastern choke-point.

The European Central Bank is also expected to raise interest rates later, weakening the dollar further and so tempting even more investors into oil.

Last week Chakib Khelil, president of the oil producing cartel Opec, forecast that the cost of crude could rise to between $150 and $170 a barrel this summer.

© Independent Television News Limited 2008. All rights reserved.