Oil price soars on Mid-East fears

OIL prices have surged to a 13-year high on fears of low US petrol stocks against a background of worsening violence in the Middle East.

London's Brent crude was trading at $36 a barrel, its highest since the 1990 Gulf War, after the killings of five Western workers at a chemicals plant in Saudi Arabia.

Opec, the cartel of oil producing countries, may discuss raising crude output at a meeting in June to deal with US shortages coinciding with the peak demand period for petrol which starts later this month in the world's biggest economy.

Purnomo Yusgianto, president of Opec, said the group may 'discuss an increase in quotas or production' at the organisation's next formal meeting in Beirut on 3 June.

The prospect of a supply increase comes as attacks in Saudi Arabia and other major oil producing countries have stoked up worries over supply security from the Middle East, which accounts for around one-third of the world's oil production.

Purnomo said that while US oil supplies remained 'tight' and there was 'panic' about security in Saudi, Iraq and Nigeria, global crude oil markets are 'well supplied'.

US petrol supplies totalled 200m barrels in the week ending 23 April, 4.1% lower than the five-year average for the week.

Meanwhile, the International Energy Agency (IEA) said high oil prices were likely to stay in place after hikes in futures prices over the past few months.

'If that is the case, the macroeconomic consequences for importing countries could be painful,' the IEA said.