FEELING THE SQUEEZE: Anxiety is spreading as prices at the pump in the United States and elsewhere continue to set record highs. -- PHOTO: AFP

Analysts said a weakening United States dollar, supply worries in Nigeria and the Opec cartel's reluctance to increase output all contributed to the price surge.

In afternoon trade, light sweet crude for delivery in June rose nine US cents to US$118.16 per barrel.

The May contract expired on Tuesday after closing at a record US$119.37 per barrel at the New York Mercantile Exchange, where it earlier hit an all-time intra-day peak of US$119.90.

Global supply jitters have seen oil contracts traded in New York spike by more than US$57 per barrel in the past year. Price records in New York and London have been broken almost daily over the past week.

Brent North Sea crude for June delivery rose five US cents to US$116 a barrel. The contract earlier touched a record US$116.75 in intraday activity.

Ministers from 74 countries attending the International Energy Forum in Rome on Tuesday said oil prices should be at levels acceptable to producers and consumers, while US President George W. Bush also expressed concern about the price levels.

Saudi Arabia's petroleum minister, Mr Ali al-Naimi, called for calm in the face of runaway oil prices on Tuesday. He said there was no imminent oil shortage.

Saudi Arabia is the biggest producer in the Organisation of Petroleum Exporting Countries (Opec).

The cartel said on Tuesday it would increase its production capacity by five million barrels per day (bpd) by 2012. Current Opec output stands at about 32 million bpd.

Mr Victor Shum, a senior principal of Purvin and Gertz energy consultancy in Singapore, said Opec's move would have little impact in the near term.

'Even though Opec has promised to increase production capacity, the long-term supply increase does not resolve the main factors that are underpinning prices now,' he said.

A weakening US dollar has spurred oil demand because dollar-priced oil becomes cheaper for buyers holding stronger foreign currencies. The euro surged to a record US$1.6002 on Tuesday on renewed jitters about the US economy.

Global supply worries were also stoked after Anglo-Dutch oil group Royal Dutch Shell reported an output loss of 169,000 bpd from sabotage of its key pipelines in southern Nigeria.

Shell said on Monday it might not be able to honour oil contracts for this month and next after the attacks.

Exporters say the world may have to live with even higher prices if it wants supplies for the future, as the cost of extracting more from the ground has soared.

'The oil market is in a state of fear, if not panic,' said Dr Shokri Ghanem, head of Libya's National Oil Corporation. 'Prices will have to stay high in the long term to encourage exploration and production.'

Producers and consumers alike were worried, but for different reasons. Producers were nervous about falling demand, and consumers dreaded economic collapse.

The International Monetary Fund has predicted the US economy may enter a recession this year, and some fear high prices may cause global economic damage.

AGENCE FRANCE-PRESSE, REUTERS