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| Oil cools after vaulting to $135 | Oil cools after vaulting to $135 |
| (about 1 hour later) | |
| Oil prices were well off their peak of $135 a barrel on Friday as investors cashed in on five sessions of rises. | Oil prices were well off their peak of $135 a barrel on Friday as investors cashed in on five sessions of rises. |
| US sweet light crude surged to $135.09 on Thursday, before tumbling to close at $130.81. London's benchmark Brent crude also fell. | US sweet light crude surged to $135.09 on Thursday, before tumbling to close at $130.81. London's benchmark Brent crude also fell. |
| But supply worries meant that prices once again found some support in European trade on Friday. | |
| US crude rose $1.49 to $132.30 amid fears about the effects of higher prices on the world economy. | |
| London Brent rose $1.70 to $132.21. | |
| 'Inelastic market' | |
| Oil prices have risen about 40% this year, as soaring demand from emerging economies looking to power their growth has been exacerbated by supply fears and speculation on the world markets. | Oil prices have risen about 40% this year, as soaring demand from emerging economies looking to power their growth has been exacerbated by supply fears and speculation on the world markets. |
| The path of UK petrol and diesel prices | The path of UK petrol and diesel prices |
| "Supplies not growing is still the main thing," said Tony Nunan at Tokyo-based Mitsubishi Corp. | "Supplies not growing is still the main thing," said Tony Nunan at Tokyo-based Mitsubishi Corp. |
| "Opec can turn the tap but they cannot do it forever, and non-Opec growth is not enough," he added. | "Opec can turn the tap but they cannot do it forever, and non-Opec growth is not enough," he added. |
| Some analysts have raised the possibility that oil could reach $200 by 2010, while others say that if geopolitical worries subside and the US dollar regains its strength, it could slip all the way back to $80. | |
| Punishing effect | Punishing effect |
| The record-busting run in oil has pushed fuel bills up to the point where British drivers will pay £110m more for petrol over this weekend's bank holiday than they did a year ago, according to the motoring group, the AA. | |
| UK'S CHEAPEST & MOST EXPENSIVE FUEL Cheapest unleaded: 107.9p (Gateshead) Most expensive unleaded: 125p (Northampton) Cheapest diesel: 117.9p (Mansfield) Most expensive diesel: 138p (Hexham) Source: PetrolPrices.com High oil prices are here to staySend us your comments | UK'S CHEAPEST & MOST EXPENSIVE FUEL Cheapest unleaded: 107.9p (Gateshead) Most expensive unleaded: 125p (Northampton) Cheapest diesel: 117.9p (Mansfield) Most expensive diesel: 138p (Hexham) Source: PetrolPrices.com High oil prices are here to staySend us your comments |
| The average price of diesel has shot up 6.76 pence per litre during the past month to 124.17 pence per litre, while the average price of petrol has risen to 112.55p per litre from 108.06p. | |
| Concerned about the knock-on effect on businesses, the British Chambers of Commerce has called on the government to abandon plans to increase petrol duty by 2p per litre in October. | |
| The high cost of fuel is also having a punishing effect on airlines, with a number warning that they will have to cut flights and increase prices to survive. | The high cost of fuel is also having a punishing effect on airlines, with a number warning that they will have to cut flights and increase prices to survive. |
| British Airways boss Willie Walsh told journalists on a press trip to promote the UK carrier's new OpenSkies venture that airlines will now struggle to offer the cheap fares to which UK travellers have become accustomed. | British Airways boss Willie Walsh told journalists on a press trip to promote the UK carrier's new OpenSkies venture that airlines will now struggle to offer the cheap fares to which UK travellers have become accustomed. |
| He told the Guardian newspaper that many budget airlines would collapse, squeezed by the deadly combination of high fuel costs and declining passenger numbers, as consumers rein in their spending. | He told the Guardian newspaper that many budget airlines would collapse, squeezed by the deadly combination of high fuel costs and declining passenger numbers, as consumers rein in their spending. |
| Investment needed | |
| UK Prime Minister Gordon Brown is working with international partners to persuade the Opec oil producers' cartel to increase supply. | |
| But OPEC secretary-general Abdullah al-Badri on Thursday repeated the cartel's stance that it can do nothing to lower oil prices in a "crazy" market and blamed surging prices on traders looking to cash in on geopolitical worries in unstable oil producing regimes, including Nigeria and Iraq. | |
| One analyst said political pressure should instead be exerted on leading producers to invest more in long-term capacity. | |
| "All this excess profit that has been generated by the oil industry really needs to be invested in refineries, pipelines and oil wells," Francisco Blanch, head of global commodities research at Merrill Lynch, told the BBC. | |
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