Oil prices continue upward spiral as markets feel jitters over Iran

Oil prices look set for another week of volatility and record prices ahead of a key report on Iran's compliance with UN Security Council demands to halt uranium enrichment.

Prices hit a new peak on both sides of the Atlantic at the weekend as concerns over Iran's nuclear programme combined with fears over instability in the oil producing nations of Iraq and Nigeria.

Analysts said markets would be on edge over the days leading up to the publication of the report on Iran by the International Atomic Energy Agency on Saturday.

"Given that the US has maintained that 'all options are on the table', including those of a military nature, this report and any accompanying sanctions are sure to cause nervousness in all markets," said economists at ING Financial Markets.

Crude prices breached $75 a barrel in New York on Saturday, on persistent fears that demand would squeeze global supplies.

In London Brent closed at $74.57, after hitting a record $74.79.

The International Energy Agency said yesterday that Opec, which produces about 40 per cent of the world's oil supply, will "just about" meet the expected growth in global oil demand over the next three years.

The IEA warned that if current policies remain global energy demand would grow by 25 per cent by 2015.

Today ministers from the world's largest consuming and producing nations will meet at the International Energy Forum conference in Doha, in the Gulf state of Qatar to discuss supply, demand and price issues.

At the weekend both the Group of Seven (G7) rich nations and the International Monetary Fund called for greater dialogue and transparency in oil markets and for greater investment in energy production and investment.

Gordon Brown, chairman of the IMF's key international monetary and financial committee, said: "I want to see a far more enhanced dialogue between consumers and producers."

The IMFC and the G7 both called for more data on production, consumption, inventories and reserves.

They also urged investment in exploration, production, infrastructure and refinery capacity.

The Chancellor said the IMFC had called for a detailed report on these issues.

Meanwhile, Mr Brown announced that Saudi Arabia and Spain had become the latest countries to contribute to a financial facility to help poor countries hit by the surge in one-off shocks such as the rise in energy prices.

"It is true to say that this is a year of reform, this is a new facility being introduced that is dealing with a particular problem that we have identified with countries now prepared to contribute to it," he said.

- INDEPENDENT