Futures touched a record $120.21 a barrel in intra-day trading. The price of crude has almost doubled in the past year, and its rise has been astonishing. Only five years ago, the Opec target price for crude was $22 to $28 a barrel; a decade ago it was about $10 a barrel. The president of Opec, the Algerian energy minister Chakib Khelil, indicated recently that the price could hit $200.

Hetal Mehta, an economist at the Ernst & Young Item Club, warned: "The modest upswing Item was predicting over the next couple of years in GDP growth is predicated on an oil price remaining below that of $100 per barrel. If this increases to $120 or $150 per barrel in the long term, this has serious implications for the strength of the wider economy. If it hits $200 per barrel then, frankly, all bets may well be off."

The dollar's continuing weakness and production problems in Nigeria are behind the latest price increases. The Nigerian Movement for the Emancipation of the Niger Delta (Mend) militant group has said it carried out the latest attack on an oil-transfer depot at Shell's Nigerian refinery, forcing the company to halt exports of 170,000 barrels of light crude a day. Last month, Mend vowed to attack every oil and gas pipeline in Nigeria.

Markets have also been unnerved by political tensions in Iraq and Iran. However, some relatively good news about the US economy seems to have given oil prices an extra boost. The US Institute for Supply Management's index of non-manufacturing businesses, which make up about 90 per cent of the economy, grew for the first time since December, suggesting that energy consumption is growing. Last Friday's unemployment figures were also comparatively good.

Phil Flynn, a New York commodities trader, said: "Maybe the demand for oil is going to rebound. People are piling back up on crude oil due to the weakness of the dollar and production issues. But it also looks like momentum play. This stubborn oil bull just refuses to die."