Oil price surges

The prospect of 90p per litre petrol moved closer today as world oil prices rose.

Trading on Asian markets this morning saw a two per cent surge in the cost of crude oil, pushing prices to over $40 (£22) a barrel.

It comes after the terrorist attacks in Saudi Arabia at the weekend which left 22 people dead. There are concerns that prices may reach a record $50 a barrel if unrest in the country continues.

The increases could push the price of petrol at the pumps to more than 92p per litre as the British and American oil markets reopen after the bank holiday.

Abdulwahab Abu-Dahesh, senior economist at Riyad Bank, said: "The immediate impact of the weekend attacks is more panic and an additional premium in prices, which will surge."

Leading oil producing nations have attempted to reassure the markets by signalling that exporters' cartel Opec will back a production increase when it meets in Beirut on Wednesday.

Saudi officials have named Nimr al-Baqmi, an al-Qaeda trained terrorist, as the leader of the group which carried out the attacks on Western workers in the city of Khobar at the weekend. The gunman, who was wounded and taken prisoner on Sunday, was high on their wanted list and a veteran of Osama bin Laden's training camps in Afghanistan, the Saudi government claims.

Briton Michael Hamilton, a 62-year-old from Sussex, was among the foreign workers killed.

A manhunt is under way in for three other gunmen involved in the attack. They escaped in mysterious circumstances with at least one survivor claiming security forces let them go. The victim's unconfirmed version of events includes claims the gunmen were set free in return for not blowing up the building with everyone in it.

The Saudi government believes that militants in the country are still being advised by Bin Laden.

The Saudi ambassador to Britain, Prince Turki al-Faisal, ruled out the possibility of any collusion between the attackers and the security forces and insisted the authorities were fighting terror groups using all means available.

The UK is advising against all but essential travel to Saudi Arabia but has not told Britons to leave. However, the UK ambassador to Saudi Arabia, Sherard Cowper Coles has warned that more attacks are likely and said that there are dozens of armed extremists at work and more attacks are in advanced stages of preparation.

Saudi Arabia is the world's biggest oil producer and by far the biggest exporter, meaning that any interruption to production there has huge implications for the cost of oil in the rest of the world.

Saudi is desperate to ensure that its oil producing facilities, responsible for almost the entire wealth of the nation, do not fall victim to terrorists.

Though the unrest in the country has not had any notable impact on the supply of oil so far it has caused jitters in the stock market and pushed up prices.

Iraqi oil exports have been cut by sabotage attacks on oil facilities and while the reduction in supplies has been relatively modest, it has caused doubts about Iraq's longer term prospects of becoming a large and stable oil exporter - also affecting prices.