Oil hits new all-time high

• Graeme Wearden
• guardian.co.uk,
• Monday June 16 2008
• Article history

Photograph: Christopher Furlong/Getty Images

The oil price spiralled to a new all-time high today of almost $140 a barrel after worse-than-expected manufacturing data for the world's biggest economy weakened the dollar.

A barrel of US crude for delivery in July hit $139.89 in US trading, breaking through the previous high of $139.12 set last week. The sharp rise startled traders, who had expected the promise of increase production from Saudi Arabia to keep a lid on the oil price.

Brent crude also hit a record high today, touching $139.32 a barrel.

The jump was sparked by the latest New York State manufacturing index, which fell for the fourth time in five months. This pushed the US currency down against other major currencies, affecting the oil price, which is quoted in dollars.

Oil has more than doubled in value in the last year, driven by rising demand, weakness in the dollar and traders betting that the price will keep rising. This has pushed up motoring costs for business and consumers, fuelling inflation fears.

This has caused blockades in Spain, and protests in South America and Indonesia. In the UK, drivers have also been hit by the ongoing strike action between Shell and hundreds of its drivers.

Saudi Arabia is Opec's largest oil producer, and yesterday it tried to take some of the heat out of rising fuel prices with plans to increase production next month.

The Saudi move followed a weekend of talks between the UN secretary general, Ban Ki-moon; the Saudi ruler, King Abdullah, and the country's oil minister Ali al-Naimi.

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