Oil prices again topped $70 a barrel as traders yesterday began to assess the hurricane damage at production and refining sites in the Gulf of Mexico.
Crude oil for October delivery surged during the afternoon to reach a new high of $70.85, after earlier falling back to a more modest $67.
Hurricane Katrina shut down 90 per cent of the Gulf's oil output and several refineries, as fears grew about the long term impact on future oil supply.
The storm led to the evacuation of more than 700 offshore platforms and rigs and came when producers were struggling to cope with demand. The Gulf normally produces
1.5 million barrels of crude oil a day, or about a quarter of the United States' domestic output.
Gasoline and heating oil prices, which hit new closing highs on the New York Mercantile Exchange on Monday, continued their upward climb.
Ray Holloway, of the Petrol Retailers Association, said the squeeze on refinery capacity in the US could have a knock-on effect on the UK.
There had been hopes the end of the US summer driving season would ease the cost of fuel but Mr Holloway said: "In a nervous oil world the hurricane is inevitably going to have an impact on the barrel price."