Oil has surged to a new record above $141 a barrel, sparking further misery for shares on the London Stock Exchange.
In early commodity trading in Asia, crude reached $141.26 before easing back slightly. The rise followed yesterday's five dollar spike above the $140 mark following predictions from production-cartel Opec that prices could balloon further this summer.
Today's new record drove the FTSE 100 Index down through the 5500 barrier in early trading.
London's blue chip share index fell nearly 3% yesterday as investors fretted over the implication sky high oil prices would have on inflation. New York's Dow Jones Industrial Average also fell more than 3% to its lowest close in nearly two years.
Crude oil is now nearly 50% more expensive than at the start of the year.
It spells more pain for UK motorists, as recent higher prices have yet to filter through to the pumps. Earlier this week the AA revealed that average diesel prices in the UK hit £6 a gallon for the first time - 35% dearer than a year ago.
Opec president Chakib Khelil shook the markets yesterday after forecasting the cost of crude would rise to between $150 and $170 dollars a barrel this summer.
The grim forecast came as calls mounted for the group to increase oil production and help reduce soaring fuel inflation.
Gordon Brown is among a raft of western leaders to have put pressure on Opec as inflation rockets on the back of higher oil and energy bills.
Bank of England Governor Mervyn King told MPs yesterday that in "real" terms, when inflation is stripped out, oil prices are now as high as they were in the 1970s.
He also warned that a further rise in oil prices posed the biggest threat to efforts to bring runaway inflation under control. Soaring fuel prices helped drive up the official cost of living index by 3.3% in the year to May, it's highest level since records began more than 11 years ago.
Fuel hungry airline British Airways was one of the worst hit Footsie firms today, down 3%. Shares in FTSE 250 rival easyJet were also more than 3% lower.
On the flip side, oil firms were among the best performing stocks today, with BP up more than 2% and Royal Dutch Shell 2% better off.
