Production cut forces oil price up

30 October 2007

The price of crude oil hit another record high on Monday as disruption to production in the Gulf of Mexico added to supply fears.

Mexico's state-owned oil company Pemex announced it was suspending around a fifth of its production because of storms, resulting in a loss of 600,000 barrels a day.

The cut in output is unlikely to last longer than a few days but was enough to ensure prices kept on climbing.

US crude gained $1.67 to close at $93.53 (£45.35). The figure represented both a record high close and, according to the calculations of some analysts, an inflation-adjusted all-time high price.

London Brent crude also closed at its highest ever level, after gaining $1.63 to settle at $90.32 a barrel.

Some analysts believe the price could rise even higher if, as expected, the Federal Reserve opts to cut interest rates in the US at its policy meeting on Wednesday.