OIL traders will return to their dealing rooms tomorrow braced for a surge in the cost of crude oil to record highs after the attack on al-Khobar at the weekend.

The Saudi Arabian authorities began a swift pre- emptive effort yesterday to calm the world’s oil markets over the vulnerability of the kingdom’s vast network of oil facilities to terrorist attacks.

Saudi Arabia, vowing to keep its installations on a state of high alert, insisted that the oil would keep flowing, but there is little doubt that the incident in al-Khobar will concentrate markets’ attention on the potential ease with which al-Qaeda or other terrorist groups could easily disrupt global oil supplies through an attack on key Saudi sites.

With crude costs already under severe upward pressure from the war in Iraq and fears over the impact of geopolitical tensions, heightened nervousness after al-Khobar will almost inevitably drive prices to highs above the record peak for US light crude of $41.85 (around £23.50) hit on May 17.

Amid growing concern that the spike in oil prices could undercut the burgeoning global economic recovery, hopes that crude costs can be reined back are now pinned on Thursday’s crucial meeting of the Opec oil cartel in Beirut.

Opec’s members are under intense pressure from the governments of the leading Western economies to step up their output to meet strong world demand and drive prices lower. Saudi Arabia has already proposed an increase in Opec’s quota of as much as 2.5 million barrels a day and finance ministers from the Group of Seven big economies last weekend issued a demand for other Opec nations to fall into line.

Under pressure from the Saudi Government, which has the only significant surplus supplies of oil to pump, Opec now seems set to agree at least substantial increases in output, or perhaps to suspend temporarily its production quotas altogether.

Purnomo Yusgiantoro, the Opec president, has hinted that a suspension of the quotas is on the cards.

Three other factors that will be unaltered by Opec’s actions are conspiring to push crude prices to new high: geopolitical tensions, strongly rising demand fuelled by the world economic upturn and supply bottlenecks in the US, where refineries are already running near full capacity.

The attacks in al-Khobar, as well as the continuing turmoil in Iraq, can only add to the impact of the first, and most important, of these factors.

But for now, the economic impact of the high oil price needs to be kept in proportion. While crude prices at these levels are undeniably damaging to the revived global expansion, they will hinder but not derail the recovery. The grim reminder from al-Khobar, however, is that, were Saudi supplies to be severely disrupted, prices could be sent soaring to levels which would make today’s record levels seem trivial.