Crude oil surged above $73 a barrel yesterday amid fears that Iran's intensifying dispute with the West may hit oil supplies at a time when there seems little immediate prospect of restoring Nigerian supplies blocked by local rebels.
Brent crude peaked at a record $73.34 before easing back to $72.67 a barrel, 16 cents up on the day.
Brent has now struck a new record in seven successive trading sessions. Fears that supplies of Middle Eastern crude might be interrupted were heightened on the market by an unexpected fall in US gasoline stocks last week to 5.4 million barrels.
None of this, though, could dampen the enthusiasm to stock market bulls on both sides of the Atlantic.
Wall Street was fired over-night by an indication that the Federal Reserve may be close to ending its long run of interest rate increases. The Dow Jones Industrial index finished with a gain of 1.67 per cent on the session, then built on that, though more cautiously, in early dealings yesterday.
In London the market responded by driving the 100-share Footsie to a new five-year high beyond the 6100 mark. It failed to hold that, but still finished 45.7 points ahead at a new five-year closing high of 6089.8.
A 86.6-point gain carrying the 250-share index to 9871.8 was slightly larger in percentage terms.
US gasoline prices have soared faster than crude since the start of April as stocks dwindled, while refiners prepared for changes to more environmentally-friendly fuels in May. Some refineries were also closed for maintenance.
The price of oil has trebled since the start of 2002 and is
nearing the inflation-adjusted peaks above $80 a barrel reached in the early 1980s, just after the Iranian Revolution.
The International Monetary Fund warned yesterday that the impact of high oil prices on the global economy is a growing concern.
The IMF said in its twice yearly World Economic Outlook that it fears that the full effects of the surge in energy prices had yet to be felt.
It called on the US to consider higher gasoline taxes to curb oil consumption, a suggestion the Bush administration can be expected to ignore.
OPEC ministers will consult informally next week on the sidelines of an energy forum in Qatar. But several of them have already said there is nothing more OPEC can do to moderate oil prices, as it is already pumping close to its full capacity.