Oil price passes $48 a barrel mark

Oil prices hit a fresh record of more than $48 a barrel yesterday, driven higher by continuing violence in Iraq and new evidence that strong demand growth in China and India has not been slowed by higher energy costs.

Oil prices hit a fresh record of more than $48 a barrel yesterday, driven higher by continuing violence in Iraq and new evidence that strong demand growth in China and India has not been slowed by higher energy costs.

US light crude traded in New York rose 93 cents to $48.20 a barrel, and London Brent gained 77 cents to $43.80 a barrel. US prices have set record peaks in all but one of the past 15 trading sessions and are up nearly $11 a barrel - 29 per cent - since the end of June.

Seth Kleinman, an analyst at PFC Energy, a consultancy, said: "Fifty dollar oil is increasingly looking like an inevitability. The question is, what happens after that?"

In Iraq, fighting raged at Najaf after the rebel Shia cleric, Muqtada Sadr, rejected government demands that he end his uprising. The country's oil exports are running at half normal rates because of the violence.

Separately, figures from two key emerging markets, China and India, pointed to severe pressure on global oil supplies. China's refineries have processed 17 per cent more crude so far this year than in 2003, the country's State Statistical Bureau reported. Crude imports to end-July have soared nearly 40 per cent from last year.

India's biggest refiner, the state-run Indian Oil Corp (IOC), said it expected India's crude oil imports to rise by 11 per cent in 2004-5 as demand rises by nearly 4 per cent. "Refineries are running flat out," MS Ramachandran, the chairman of IOC, said.

Mohammed-Ali Zainy, a senior analyst at London's Centre for Global Energy Studies, said that, when markets were nervous, "people were willing to buy at any price". He added that prices would moderate when demand reduces, and that much would depend on how cold the winter will be.