Rationing is already being enforced at some British outlets amid panic buying.

Soaring oil prices are hurting Singapore car drivers at the petrol pump, just as they are adding to corporate costs around the globe - fuelling growing inflation fears.

The question on everyone's lips now: Just how high will oil prices go?

Experts and other oil industry figures are split. Some say it could hit US$200 a barrel, but others expect the price to ease to an average of US$95 a barrel this year and the next.

Still, the latest developments are adding to the jitters.

Oil for June delivery rose as much as US$1.41, or 1.2 per cent, to US$119.93 a barrel in after-hours electronic trading on the New York Mercantile Exchange yesterday - the highest since futures began trading in 1983, reported Bloomberg.

The contract eased back to US$119.04 a barrel by noon in Europe, up 52 US cents from last Friday's close of US$118.52.

The shutdown of one of Britain's biggest oil refineries over a pension-row strike was expected to prompt more panic buying of petrol yesterday as motorists, particularly in Scotland and northern England, rushed to pumps to stock up.

Also in Nigeria last Friday, the key armed group in the southern oil-producing region sabotaged a supply pipeline owned by Shell.

In a report last Friday, Mr Adam Sieminski, Deutsche Bank's chief energy economist, said there was a huge risk that oil price 'will escalate until it gets to some level when demand finally collapses because ordinary people can no longer afford to burn as much energy as they are burning now'.

Organisation of Petroleum Exporting Countries (Opec) president Chakib Khelil reportedly does not rule out oil hitting US$200 a barrel even with adequate supply.

At a seminar at the National University of Singapore yesterday, Professor Sam Ouliaris of the economics department had a more conservative estimate. He sees average oil prices at about US$95 a barrel for this year and the next, and cited several key reasons for the recent hikes: tight supply, disruption of oil facilities, Opec's limited excess capacity, and the declining US dollar, in which oil contracts are priced.

Speculative activity by hedge funds - lured to commodities trading because of the volatility of equity markets and low interest rates - has also contributed to the price hikes, he added.

Prof Ouliaris, a former senior International Monetary Fund researcher, added that consumption in growing major markets such as China and the Middle East is driving up prices. But he said the recent oil price shocks are 'small, relative to those in the 1970s'.

For hikes to have the same impact as they did in the 1970s, when oil rose from around US$3.50 a barrel to US$35, current prices would have to hit US$250 a barrel in 2010 to 2013, said Mr Sieminski in his report.

Standard Chartered Bank economist Alvin Liew, however, puts oil prices slightly higher at about US$104 a barrel for this year.

'I think we can see an easing of demand in the second half of the year. If the US is indeed in a recession, demand will fall accordingly,' he said.

Prof Ouliaris added that a long-term solution is to minimise the growth in consumption, particularly in the transport sector, as oil supplies are likely to remain tight.

'In the meantime, get used to high oil prices,' he said.

jcheam@sph.com.sg