Oil prices have hit fresh record highs after the head of Opec said that the producers' cartel was powerless against the market surge.

In New York the price of benchmark US crude rose by $0.42 a barrel to $44.24 a barrel overnight, the highest level since the oil market was reconfigured 21 years ago. In London Brent crude futures for September settlement today touched $40.45, a 14-year high, before slipping to $40.26 in afternoon trade.

US crude is now nearly 50 per cent more expensive than it was at the end of last year.

The AA said drivers in the UK were likely to feel the effect of higher crude costs which have already led to higher prices on garage forecourts.

"I think we are unfortunately going to have to live with petrol over 80p a litre for the foreseeable future," said Richard Freeman, a spokesman for the motoring organisation. "Certainly in the short to medium term it looks like the pressure will continue."

Traders said that the latest price increases reflected comments by Purnomo Yusgiantoro, the Opec president, that the cartel had no extra oil to bring to market.

"The oil price is very high, it's crazy. There is no additional supply," he said.

Although Saudi Arabia had spare capacity it could not, for the time being, be brought on line.

The comments echoed those yesterday of Chakib Khelil, the Algerian Oil Minister, who said that Opec could "do nothing" to quell the oil price surge.

While Russia, which is not an Opec member, had been viewed as an answer to the global oil shortage, with rising production taking the country to second place in the output league behind Saudi Arabia, the Yukos crisis has trimmed traders' expectations.

Yukos, Russia's largest oil company, faces a £3.5 billion bill for unpaid 2000 and 2001 taxes. Although Yukos has been given a month to pay the taxes, analysts estimating that investigations into other years could add £5.5 billion to the bill.

Warnings of terror attacks on US cities have also underpinned the oil market by raising uncertainty over supplies.

Bruce Evers, the Investec oil analyst, said: "The geopolitical situation is not going to get better any time soon. The world is going to have to get used to the changed situation."

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