The price of Brent oil remained around 10-year high levels in volatile trading here yesterday as dealers continued to anticipate supply shortages regardless of an unexpected increase in US oil stocks. Some analysts predicted prices could jump to as high as $35 a barrel in London and $40 in New York by the end of the year - unless the supply situation improved.

A fall in oil prices would greatly help reduce inflation, which has risen to 6.2 per cent in the Republic, as it, along with food price rises, is one of the key contributors to recent increases.

Some Irish petrol suppliers are still hoping for a fall in prices in the short term, but a spokesman for Shell noted the hardening of Brent prices, and the dollar, which, if sustained, would eventually feed into higher prices. This would also further increase the rate of inflation.

A spokeswoman for Esso said there are no immediate plans for increases, but she also noted that crude prices "were creeping up". A spokeswoman for Statoil pointed to the volatility in the market and said it was "quite impossible to predict what the latest rise in crude prices will have on pump [retail] prices."

By late yesterday afternoon, Brent crude for September delivery was being traded at $32.40 per barrel, 22 cents higher than Tuesday's close.

Exceptionally, the level was higher than in New York, where light sweet crude for September delivery was trading at $31.62 per barrel, five cents lower.

In London on Tuesday, crude prices reached a session high of $32.80 per barrel, the highest level since November 1990 when the price rose to $32.45 following the invasion of Kuwait by Iraq.

On October 10th, 1990, Brent had risen to $40.95 a barrel.

Prices began to surge ahead of Tuesday's publication of figures by the American Petroleum Institute (API), amid expectations the body would reveal a continued decline in stock levels.

The chief economist at the Centre for Global Energy Studies, Mr Leo Drollas, said prices could rise to $40 per barrel in New York and $35 in London by the end of this year - but only if the Organisation of Petroleum Exporting Countries (OPEC) did not agree an output increase at its ministerial conference in Vienna on September 10th. He also stressed that such price rises would be occasional spikes, not averages. Moreover, Drollas predicted that OPEC would agree to pump at least 500,000 extra barrels a day.