OIL prices soared to a record high in London yesterday as tensions between Iran, a major oil exporter, and the United States grew.

Fears that petrol prices will have to rise again, after a spate of increases before Easter, mounted as diesel approached £1 a litre in most parts of Britain.

Brent North Sea crude hit a record $71.40 in early trading, before closing at $71.01 for June deliveries, on fears that the US may launch military strikes against Iranian nuclear sites.

The tension was reflected in New York, where US light sweet crude prices hit $70.40, the highest level for nearly eight months. That price is the highest seen since Hurricane Katrina battered oil infrastructure along the US Gulf coast, disrupting production.

Oil prices have surged 13 per cent this year, driven mainly by concerns about supplies from the Opec members Iran, Nigeria and Iraq.

Average UK petrol prices for unleaded fuel have now reached 93.2p at the pumps, according to the AA, up 17 per cent since January last year.

Prolonged high prices at the pumps will also affect the competitiveness of British business and industry, the RAC Foundation said. Edmund King, executive director of the RAC Foundation, said: “We are feeling the increase in oil prices more than most places in Europe, because of the high duties. Much of distribution of goods and freight is almost entirely dependent on the road network and these prices will inevitably feed through to business and industry. They will also affect inflation.”

Concerns about the impact of soaring energy prices on industry will also feature at an energy conference on Wednesday, when Derek Simpson, leader of Amicus, the trade union, will tell the Government that high energy costs are crippling industry. Mr Simpson will say that energy costs are overtaking globalisation as a cause of job losses in manufacturing.

He will say: “The Government must urgently give a clear indication of its energy policy following the completion of the energy review. British industry needs certainty. Thousands of jobs depend on it.”

Iran’s insistence on enriching uranium for use in nuclear power stations is the main reason behind yesterday’s surging oil price. The country is the world’s fourth-largest oil exporter and there are fears that supplies could be disrupted if sanctions are imposed on Iran to punish it for ignoring the United Nations Security Council’s demand that it stop enrichment of uranium.

Tehran insists that its programme is solely for generating electricity, vehemently denying Western charges that its real goal is atomic weapons.

Meanwhile, more than 500,000 barrels per day of production continued to be shut in Nigeria after militant unrest. However, there was relief that Chad had backed down on threats to halt oil production, as the US offered to mediate in its dispute with the World Bank.

Separately, ministers from the Organisation of the Petroleum Exporting Countries (Opec) said that there was nothing more that the group could do to calm the markets. “On production, there is nothing we can do. We are already producing at maximum output,” Abdullah al-Attiyah, Qatar’s Oil Minister, said. “There is no shortage in supply.”

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