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Crude oil futures cruised past US$98 a barrel yesterday, up over 25 per cent from a month ago, as investors kept piling into the commodity.
The fast-rising cost of this crucial resource has fuelled worries of higher consumer prices, as it could indirectly push up the cost of electricity, transport and the shipping of goods worldwide.
Singapore motorists have already seen their petrol bills growing, while travellers may face heftier airline fuel surcharges.
The price of Shell's V-Power petrol, for example, has risen from $2.027 a litre before discounts in July to $2.199 before discounts as at Monday.
And last month, Singapore Airlines raised its fuel surcharge for the third time this year. The latest increases ranged from 6 to 9 per cent, with the highest percentage rise on regional routes.
The impact of rising crude prices has been exacerbated by a similar run-up in the prices of soft commodities like palm oil and wheat. As a result, it has become more expensive to eat and shop.
Oil traders blamed a wide range of factors for driving up crude prices yesterday.
These ranged from a weak US dollar, to storms hammering Europe's oil-producing North Sea region, to fears that American supplies of heating oil would be insufficient to meet winter needs.
Strong investor appetite for oil was further buoyed by predictions of soaring energy demand by the International Energy Agency in its annual World Energy Outlook released yesterday.
The influential energy watchdog expects a doubling of China and India's energy needs from 2005 to 2030.
Analysts are now bracing themselves for US$100 a barrel sooner, rather than later.
'The market remains bullish and seems to be on an upward trend to hit the psychologically important US$100 level,' Mr Victor Shum of energy consultancy Purvin and Gertz told the Associated Press.
For Singapore, the impact of higher oil prices in US dollar terms has been somewhat mitigated by the strengthening Singapore dollar, said economists.
Since late September, the greenback has fallen nearly 4 per cent against the Singdollar, and dipped below $1.44 last night.
But the run-up in oil prices comes as food prices are climbing globally, said Standard Chartered economist Alvin Liew, warning of inflationary pressures.
'This will affect the lower-income group significantly, because transport and food, which make up the bulk of their spending, are where price pressures are coming from the most.
'So for every dollar they have next year, they will be able to buy less,' he said.
Faced with the prospect of pricier petrol, motorists such as Mr Nathanael Tan, 27, have taken steps to cut costs.
He has seen his petrol bill grow from about $200 a month earlier this year to as much as $270 a month now. The safety officer now drives with his car's air-conditioning turned off in the mornings to save petrol.
