The price of oil bounced back to record highs today when Opec refused to increase supplies following Saudi Arabia's promise to the US that it would provide an extra 300,000 barrels a day.

Chakib Khelil, president of Opec, made up of 13 nations that produce 40 per cent of the world’s crude oil, today denied there were supply shortages. He added that the cartel would not gather prior to an official meeting in June, effectively ruling out any increases to supplies.

Mr Kehlil said: "…indications show that there is no shortage." Qatar oil minister Abdullah al-Attiyah also said there was no need to boost oil supplies to global markets, stating: “The market doesn’t need more oil." While the Iraqi oil minister Hussain al-Shahristani said: “There is more oil in the market than consumers want.”

In New York, the price of light, sweet crude for June delivery rose from $125.92 to US$126.35. In London, Brent crude for July delivery was up 82 cents at $125.81 per barrel.

While prices rose, oil per barrel stayed below the new $127.82 record reached on Friday when President Bush met with Saudi Arabia’s King Abdullah who pledged an additional 300,000 barrels of oil today to help ease rising demand.

However, the increase from Saudi Arabia, a key Opec member, will be overshadowed by huge diesel demand from crisis-hit China.

The price of oil is expected to rise further this year, with Goldman Sachs expected it to increase to $141 in the second half of 2008.

At the same time, America has decided to stop shipments to its strategic oil reserve for the second half of the year after Congress passed a bill calling for a suspension.

The US Energy Department announced it had not signed a six-month contract for deliveries to the US Strategic Petroleum Reserve (SPR), the world’s largest stockpile of government-owned emergency crude oil, affecting up to 13 million barrels of crude.

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