LONDON (AFP) - World oil prices surged into new record territory above 50 dollars a barrel as traders took fright at a multitude of supply threats, including unrest in Nigeria and recent hurricanes.
But feverish markets cooled slightly after Saudi Arabia undertook to increase oil production capacity to 11 million barrels per day (bpd) within weeks.
New York`s light sweet crude for November delivery hit 50.47 dollars a barrel in electronic deals, the highest level in the contract`s 21-year history.
Prices later stood at 50.07 dollars per barrel, showing a rise of 43 cents.
Traders worried over unrest in major oil producers Nigeria - an important supplier to the US market -- and Saudi Arabia, recent hurricanes in the Gulf of Mexico, violence in Iraq and the financial woes of Russian energy giant Yukos.
An armed group accused of trafficking in illegally extracted crude in Nigeria threatened to attack international oil facilities and personnel in the troubled Niger Delta region, a regional government spokesman said.
"It`s all about supply disruptions, not just in the Middle East but also in Nigeria, in the Gulf of Mexico or in Russia," said Commerzbank energy analyst David Thomas.
"On top of that, we have ever-tightening inventories with the further forecast of crude stocks being down again in the US because of the hurricane activity," he added.
In London the price of reference Brent North Sea crude oil for delivery in November hit a new summit of 46.80 dollars in electronic trading, the highest level since trading on the London market began in 1980.
Prices stood at 46.44 dollars in afternoon trading, a rise of 51 cents.
Crude oil futures had smashed the 50-dollar barrier for the first time in after-hours New York deals on Monday.
Adjusted for inflation, world oil prices remain far below the levels reached in the wake of the 1979 Iranian revolution when prices surged to about 80 dollars a barrel in today`s money.
But prices have more than doubled from about 20 dollars a barrel in New York at the start of 2002, surging by about 50 percent since the start of this year.
Prices rose after the Niger Delta People`s Volunteer Force, led by Mujahid Dokubo-Asari, said in a statement late Monday it would launch an "all-time war against Nigeria" from October 1.
It advised oil majors to leave the delta, which pumps all of Nigeria`s 2.3 million barrels per day production.
Oil giant Shell has already evacuated 200 non-essential workers from the Niger Delta oil region and on Tuesday closed a flow station, Santa Barbara, which produces about 28,000 bpd of oil, because of restrictions on staff movements, a company spokesman here said.
"The situation remains tense and the risks related to water transportation are high," he added.
Nigeria is a major supplier to the United States, producing light sweet crude which is in high demand at the moment.
Traders took some comfort from Saudi Arabia`s Oil Minister Ali al-Nuaimi`s pledge that the kingdom would use two fields which recently came on stream to hike its production capacity to 11 million barrels per day.
The Arabic version of Nuaimi`s statement said the increase would take place "within the next few weeks."
Nuaimi said this would give Saudi Arabia, currently pumping 9.5 million bpd, a surplus output capacity of 1.5 million bpd.
Recent hurricanes that have disrupted production, imports and refining in the US Gulf of Mexico, which accounts for 25 percent of US supplies, have driven US oil inventories down to the lowest levels since February.
Sabotage attacks on Iraqi pipelines and recent fighting between suspected Islamist militants and security forces in Saudi Arabia, where a French citizen was shot dead at the weekend, have only added to market jitters.