Storm fear continues to inflate oil price

28 August 2008

Oil prices have risen further as fears that production in the Gulf of Mexico will be disrupted continue.

Tropical Storm Gustav could arrive as a hurricane and the potential damage has been anticipated by some oil companies, which have evacuated workers from rigs.

Yesterday the cost of a barrel of crude oil in New York rose by $1.88 (£1.02) to reach $118.15, with a subsequent spike in home heating oil prices likely.

And the price could rise even further if the sort of damage caused by Hurricanes Katrina and Rita in 2005 is seen again.

Alaron Trading analyst Phil Flynn told the Associated Press: "A bad storm churning in the gulf could be a nightmare scenario. We might see oil prices spike $5 to $8 if it really rips into platforms."

Last month the production of at least one refinery in the Gulf of Mexico was shut down by Tropical Storm Dolly.

Click here for home heating oil price trends