Oil prices hit 13-year highs

Oil prices surged again yesterday, setting fresh 13-year highs, on worries about Middle East supply security and fears for summer gasoline shortages in the United States.

In response to the recent steady rise in oil prices, US Senator Charles Schumer, a Democrat from New York, said that President Bush should release 1 million barrels a day of crude oil from the nation's strategic reserves for at least a month.

US light crude shortly before the close was up 72 cents at $39.60 a barrel. US gasoline set an all-time high of $1.319 a gallon. In London, Brent crude peaked up 97 cents at $36.90 a barrel, its highest since October 1990, shortly after Iraq's invasion of Kuwait.

''Violence in the Middle East specifically targeting oil assets has raised the bar with regards to the fear of supply disruption," said Josh Sadler, energy analyst with Societe Generale.

An attack on Saturday by Islamic militants on foreign workers at a petrochemical plant in the Saudi Red Sea city of Yanbu followed a failed suicide bombing mission 10 days ago at Iraq's Basra oil export terminal. Supply security concerns have drawn investment funds to oil. The Goldman Sachs commodity index, heavily weighted toward energy, set an all-time high yesterday.

''Saudi Arabia's oil infrastructure has three major export arteries and looks as defensive as it could be to attack. However the risks have clearly risen," said oil analysts at Deutsche Bank in a report.

Schumer's call on the Senate floor to tap the strategic reserve came amid concerns that supplies will run short when demand peaks this summer. The average US pump price has been at a record for six weeks.

The use of oil from the Strategic Petroleum Reserve would also counter the Organization of Petroleum Exporting Countries' March 31 decision to cut production quotas, Schumer said.

Bush has said the reserve should be filled to its capacity of 700 million barrels and should be used only for supply disruptions.