Oil prices jumped to a record $111 a barrel this evening, extending a rally that has added nearly 30 per cent to prices in just over a month, amid all-time weakness in the dollar.
US crude for April delivery was 21 cents higher at $110.13 a barrel by 1830 GMT, after striking the new high of $111.00 earlier. London Brent crude for April, which expires tomorrow, rose $1.07 to $107.34 a barrel.
Oil's surge comes as fears of a recession pummel the value of the US dollar - a factor that has propelled the nominal price of virtually all commodities traded in the currency, despite the risk of a slowdown in underlying consumption.
The dollar dropped to a 12-year low against the yen and a record low versus the euro today on uncertainty about the long-term effect of the Federal Reserve's efforts to ease strained credit and money markets.
Adding to oil's strength, the Organization of Petroleum Exporting Countries has shrugged off calls from consumer nations for more oil to pull prices back from their peaks.
"There is no shortage in supplies ... Actually, supplies are very comfortable," Qatar's oil minister, Abdullah al-Attiyah, told Al Jazeera television when asked about record prices.
"Investors have felt extreme pressure, so they headed to oil and gold, after losing confidence in stock markets, property markets, bonds and others," he said.
A US government report yesterday showed domestic crude stocks rose more than expected last week to the highest since November, while petrol stocks rose to a 15-year high.