MercoPress. South Atlantic News Agency

OPEC: oil prices have gone “crazy”.

Oil prices hit a new record this Tuesday, above 44 US dollars the barrel, after OPEC's president told a jittery market that the cartel was unable to provide more supplies to the market which he described as operating at “crazy levels”.

"There is no more supply, the oil price is very high, it's crazy", was the dramatic announcement of OPEC president Purnomo Yusgiantoro which followed a weekend US government warning about possible terrorist attacks against financial institutions and signs that a controversial dispute between the Russian government and the country's main oil company could end in supply disruptions.

In New York light sweet crude finally closed at 44,15 US dollars the barrel and in London Brent crude settled at 40,67 US dollars the barrel.

However Mr. Yusgiantoro said that Saudi Arabia, the world's largest oil exporter, could increase production up to ten million barrels per day, but not immediately.

Oil analysts agree that OPEC is pumping at its highest but instability in the Middle East, labor disruption in Nigeria, the coming recall referendum in Venezuela that could lead to further political turmoil plus the a soaring demand from fast growing China and a strong recovery of the US economy have turned the situation particularly sensitive.

China has become the world's second major importer of oil behind the US. In 1992 China consumed 2,9 million barrels per day, ten years later 5,4 million barrels and in 2003, 6,2 million barrels and still increasing.

"We're in a stage where the (terrorist) threat alert is causing more confusion and uncertainty in the market", said a New York Mercantile Exchange operator.

Early in the week the French Hydrocarbons Institute forecasted that if for any reason the Russian giant Yukos ceases production, "there's no way OPEC can compensate the loss and the barrel could easily break the 45 US dollars a barrel benchmark".

In Washington US Treasury Secretary John Snow said that the oil prices stampede could hamper the US economy recovery since it's absorbing a "lot of money which if in the pockets of consumers could be spent in goods and services".

Mr. Snow's comments follow the release of data indicating US consumers last June cut spending by the largest amount in three years reflecting fears about a sluggish employment market and rising fuel prices.