US oil prices rose nearly $2 a barrel to $108 in early trading on concerns that Hurricane Ike would hit the Gulf of Mexico and that Opec may agree to cut production at tomorrow’s meeting in Vienna.

US light crude for October delivery rose $1.75 to $107.98, after climbing as much as $2.89 in early trade.

The gains broke a streak that knocked prices to their lowest since April after Hurricane Gustav left most Gulf oil and gas facilities intact.

However, the renewed threat of damage to oil production by Hurricane Ike sent prices rising, with London crude gaining $1.39 to $105.48. But trading in Brent was halted later in the day because of a technical hitch on the ICE futures exchange. It resumed after 80 minutes at $105.03.

Trading also rose on comments from Iran’s oil minister, who said that there is too much crude on the market, adding that Opec, the 13-member cartel of oil-producing countries, is reviewing whether supply exceeds demand before deciding whether to cut production.

Gholam Hossein Nozari said: “We believe the market is oversupplied”. Iran, Opec’s second biggest producer, has been the most vocal proponent of tightening output.

The recent retreat in oil prices has led it to suggest that it is time to reduce output from the nearly 30.5 million barrels a day being pumped last month by the organisation’s members.

However, a major cutback is unlikely without Saudi compliance, and the Saudis — de-facto Opec policy setters who are now producing nearly a third of total OPEC output — have given no hint they favour that option.

Ali Naimi, the Saudi Oil Minister, has instead talked about a floor of $80 as the trigger for action. Prices remain 14 per cent higher this year than in 2007, and a barrel of benchmark crude fetches four times what it did five years ago.

Any move by Opec tomorrow to pare back output would result in protest from the US and other big consumers, and give a larger platform to Republican presidential candidate John McCain and Barack Obama, his Democratic counterpart, to call for reduced dependence on foreign oil.

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