Fujitsu has opened a £44m energy-efficient data centre in the UK which it says will contribute towards saving enough electricity each year to power up to 6,000 homes. The centre was announced last August and is designed to address the shortage of data storage in London. Located 35 miles from the capital, the site will serve customers in the UK and Europe, giving them increased capacity without the need to build their own facilities. “Fujitsu’s new data centre combines high resilience and high efficiency, which is difficult to achieve,” said Martin Provoost, head of data centres at Fujitsu Services. “Attaining high resilience requires more redundant infrastructure, which in turn consumes more energy. “However, through new technology, Fujitsu’s data centre achieves the optimum resilience level and a leading efficiency rating.” The centre’s new features will save enough electricity to power 2,000 households a year, Fujitsu said. These features include evaporation towers that remove heat more efficiently than air-conditioning systems, and heat pumps that reuse heat from other areas. It also uses a more energy-efficient uninterruptible power supply to maintain the electricity in case of power failure.

Businesses across the country are heading into annual negotiations with their power suppliers, facing the prospect of a 100% rise in their annual bills. About half of UK small and mid-sized firms strike annual energy contracts that expire in October, and are beginning to enter talks about new deals. Wholesale electricity prices for this winter have jumped to more than £90 per megawatt hour, according to figures – an increase of 110% on last winter. Gas prices have jumped 130% over the same period. The soaring costs, which are hammering company finances across the length and breadth of the country, provide further evidence of the inflationary pressures on the economy. Even some household names are complaining about soaring power bills, behind closed doors. Tesco has seen all the financial advantages of an eight-year programme to halve its power consumption through green initiatives wiped out by soaring prices. James Griffin, a director of Star, an internet services company that employs 250 people in Gloucester, London and Manchester, said energy costs made up 30% of his total overheads. His energy bills had jumped 70% in the past 18 months, with his three data centres alone now consuming £1.5m worth of electricity a year. “I used to worry about how much revenue I could generate from each of my servers,” said Griffin. “Now I worry about how much I can squeeze out of each unit of power.” Griffin’s fears reflect the experience of firms across the UK. One chain of six small car dealerships in South Yorkshire has seen its electricity bill jump to £60,000 a year, from £30,000 a year ago. A specialist baker in Surrey, producing muffins and cakes, has seen its bill jump from £250,000 to £500,000 – the firm has already been hit by soaring wheat costs. A car-parts manufacturer in Manchester, meanwhile, has seen its power bill climb from £70,000 to £160,000.

BG Group Plc, the U.K.’s third- largest oil and gas producer, said oil prices are too high to be sustained. “The current prices, if you look at the underlying long run marginal cost of oil production, are too high to be sustained,” BG Chief Executive Officer Frank Chapman told the Australian Broadcasting Corp. “There is a good deal of speculative anxiety because of geopolitical effects, holding the price up.” Crude oil has more than doubled in the past year to a record $142.99 a barrel in New York on June 27th. The price of oil will climb to $170 a barrel before year’s end because of the declining dollar and political conflicts, OPEC President Chakib Khelil predicted yesterday. “We’re screening projects still down as far as $30 a barrel. We think around mid-fifties is a price that could be sustained if you take away all of the anxiety,” Chapman said. “We have to make sure that our investments are taking account of that low case as well as looking at what might happen in a high case.” BG is offering A$13.8 billion ($13.3 billion) in its hostile bid for Origin Energy Ltd., Australia’s biggest producer of gas from coal seams. “It’s a very good business, an extremely well-run business and we would like to add that to BG’s portfolio and pursue all those businesses, retail, power generation and the coal seam gas business,” said Chapman.

Homeowners could be forced to improve the energy efficiency of their properties under Government plans, it has been reported.

Proposals to be announced in a renewable energy strategy next week include new powers requiring people to reduce their carbon footprint when they renovate their homes, a newspaper has claimed.

It said one in four properties could be installed with solar heating equipment.

Other compulsory measures could include replacing oil-fired boilers.

The new onus on householders is part of £100bn package which would also see thousands new offshore wind farms built and a massive tree-planting drive.

The ideas are set out in a consultation document to be published by the Department for Business, Enterprise and Regulatory Reform in response to climate change.

The Government wants to reduce increase the proportion of energy from renewable sources to 15% by 2020.

A spokeswoman confirmed that the Government would be announcing an expansion of renewables next week but declined to comment on details which were yet to be published.

Significant increases in gas and electricity prices are “very likely” in the coming period, energy minister Malcolm Wicks said. Mr Wicks put the blame for domestic energy price hikes on massive increases in the cost of oil, gas and coal on global markets. His comments came after reports that unnamed industry sources believe household energy bills could increase by as much as 40% this winter. Mr Wicks did not confirm the reported rises, which it is claimed could add £400 to a family’s bills. Asked if he recognised the figure, he said in an interview: “There are estimates and guesstimates and guesses. Let’s see what happens.” He added: “Yes, I’m worried about the scale of it. I can’t give you a figure because actually, with respect to all the experts, no-one knows. “Clearly, given the price of a barrel of oil and also the rising wholesale cost of coal and gas, it is very, very likely that we are going to see significant increases in the future. “This is a global issue. It’s affecting not just Britain but all countries and we have got to tackle it on a number of fronts.” Mr Wicks rejected claims that the UK was facing particular difficulties with energy bills. “Our prices for electricity are still lower than in many parts of Europe,” he said. “Over the last 12 years we have had lower costs compared with Europe, so the idea that there is something peculiar about Britain, frankly, is good polemic, but it is not evidence-based.”

Household energy bills could increase by as much as 40% this winter, the BBC has learned, as oil and wholesale gas prices hit record highs. The increases could mean households paying £400 more a year on average for their gas and electricity, senior industry sources have said. The increase is far more than analysts have predicted in recent months. It would put more pressure on homeowners already struggling with higher food and fuel costs. Announcements are most likely to come in August, when energy bills are not at the forefront of people’s minds, says BBC business correspondent Nils Blythe. There is a great reluctance in the industry to be the first to reveal a big rise, so the rises may be unveiled in stages, our correspondent adds. The prediction from senior sources in the energy industry is the highest yet. However, some analysts forecast the increases will be nearer 25%. The news comes on the same day that Chancellor Alistair Darling called for restraint in pay settlements to prevent the UK falling into an “inflationary spiral”. However, Dave Prentis, general secretary of the public sector union Unison, warned that a large rise in energy bills would have a “massive effect” on his workers and could lead to some pay negotiations being reopened. “We reached a three-year agreement in health at Easter when the retail prices index [measure of inflation] was much lower than it is now,” he said. “If prices continue to spiral, that health agreement will be opened and if the government says we are not going to, then we will take industrial action,” Mr Prentis said. According to Capital Economics, a 40% jump in gas and electricity bills would add 1% to the Retail Prices Index measure of inflation, which currently stands at 4.3%.

Last month, Centrica – which owns the UK’s biggest energy provider, British Gas – signalled that gas prices for customers could increase again in 2008, as it was being squeezed by rising wholesale prices. According to industry watchers Platts, the wholesale price of gas has risen 74% since the start of the year, with gas to be supplied in winter 2008 hitting a record high last week. The wholesale gas price is closely linked to the price of oil, which itself hit a record high of just under $140 a barrel this month. In January, a barrel of oil cost $100.

Consumers could be hit by energy price rises of up to 40 per cent this year as power companies struggle to maintain profitability in the face of a trebling in wholesale gas prices. Leading market analysts said yesterday that an increase of that magnitude would drive average UK energy bills from £1,048 at present to £1,467 within seven months. John Hall, an adviser on energy issues to industrial and corporate clients representing 15 per cent of the UK commercial gas and electricity market, said that Britain’s six major energy suppliers would need to raise prices by between 30 and 40 per cent this year to maintain margins.

Wholesale gas prices, which are linked to global oil prices, have increased nearly threefold in a year from 36.35p per therm in June last year to 94.54p yesterday. They briefly touched record highs of about 105p per therm earlier this month. Crude oil prices have also touched a record of nearly $140 a barrel this week. Mr Hall said: “Unless there is a dramatic fall in oil prices, that is the scale of increase we are talking about to ensure that energy companies keep their margins.” Britain’s power companies are gearing up for a fresh round of price rises, the first of which could come as early as next month. Mr Hall predicted that a staggered increase, with one in the summer and another in late autumn or early winter, assuming wholesale prices remain at current levels, is likelier than a single increase, which would trigger a huge public outcry.

Peter Atherton, utilities analyst for Citigroup, agreed that power companies will need to consider price rises of 30 per cent-plus this year if they expect to maintain reasonable profit margins from retail distribution. However, he expected that the public outcry that would result from such big rises would lead companies to accept very low profits from their supply businesses this year and to balance that against higher earnings from power generation.

The warnings came yesterday as MPs accused Ofgem, the energy regulator, of being a toothless tiger that did not do enough to help consumers in the face of soaring energy prices.

At a Commons committee hearing, Lindsay Hoyle, Labour MP for Chorley, made a stinging attack on Alistair Buchanan, Ofgem’s chief executive. Mr Hoyle said that energy companies blamed poor planning laws for not building enough storage facilities to enable Britain to be self-sufficient but he said that it was in the companies’ interests not to tackle the problem since they stood to benefit from passing on the higher prices to consumers.

Mr Hoyle asked Mr Buchanan whether he was prepared to act now to address the issue, adding: “Or are you the toothless tiger that we imagined?”

Citigroup’s analyst thought the likeliest pricing scenario is a rise in retail prices of up to 25 per cent, which would lead to extremely thin or zero profits from retail power supply.

However, not all energy companies are in a position to do that easily. Some companies, such as E.ON, have substantial generation capacity. Others, such as Centrica, the owner of British Gas, are particularly exposed to wholesale price rises because they lack their own generation capacity.

Patrick Herren, an independent energy market analyst, said about half the cost of a household’s gas bill and one third of the cost of an electricity bill was the commodity cost of the gas itself, with the rest being made up of transport and distribution costs.

Moreover, National Grid expects gas output from the North Sea to fall 11 per cent this winter, significantly more than expected. More gas will need to be shipped to the UK from overseas as liquefied natural gas. That will put the UK in direct competition with Japan and South Korea, which are entirely dependent on LNG imports and pay top global prices.

According to a recent report gas prices in Britain are rising faster than almost any other Western European destination, with officials stating that foreign suppliers are rationing our gas supplies and effectively driving price up. Both gas and electricity prices went up earlier this year by a significant amount, sending domestic household bills soaring in some cases. A recent report has also indicated that prices are set to soar once more in the autumn, with annual household gas bills likely to smash through the £1000 a year barrier. In the past year energy prices in the UK have gone up by around 13.6%. This had resulted in the average household bill rising by hundreds of pounds a year. However, in Germany energy prices have only gone up by 9.5% in the same period, in France by around 12%, and in the Netherlands by only 2.8%. It is thought that household energy bills in the UK could rise by around 25% when the price hikes come into effect in the autumn. Officials state that the reason behind this issue is that lack of gas from the North Sea has resulted in Britain becoming more reliant on imported gas during the winter months when a larger supply is needed. Cheap North Sea gas is being purchased from Britain by foreign companies in the summer, and is then being put into huge storage facilities on the continent. Lack of facilities means that Britain is not able to store gas in this way. Larger scale gas users, such as certain businesses, have warned industry officials that Britain is now at the mercy of foreign suppliers because its storage facilities only hold enough gas for thirteen days, whereas in France there are storage facilities that hold enough gas for 122 days and in Germany for 99 days.

Crude oil fell as the rising U.S. dollar reduced the appeal of commodities as a hedge against the currency. Oil, gold and copper declined as the dollar gained for the third time in four days against the euro and yen on speculation rising U.S. retail sales will support the Federal Reserve’s case for raising interest rates. Oil climbed more than $5 a barrel yesterday on lower U.S. stockpiles and traders may be selling contracts to lock in gains. “The dollar is dominating everything again,” said Andrey Kryuchenkov, an analyst at Sucden (U.K.) Ltd. in London. “There is a bit of profit-taking after the rally. There are really aggressive speculators in the market.” Crude oil for July delivery declined as much as $3.78, or 2.8 percent, to $132.60 a barrel in electronic trading on the New York Mercantile Exchange. It was at $133.32 a barrel at 1:42 p.m. London time. OPEC President Chakib Khelil said the oil-producer group won’t raise output at a summit with consuming nations in Saudi Arabia later this month. Yesterday, oil rose $5.07, or 3.9 percent, to settle at $136.38 a barrel. Oil futures have doubled in the past year, reaching an all-time high of $139.12 a barrel on June 6, as investors looking to hedge against the dollar’s drop helped push oil, gold and corn to records. The dollar rose to $1.5416 per euro at 12:45 p.m. in London from $1.5552 late yesterday in New York. The U.S. currency gained to 107.40 Japanese yen from 106.96 yen. Brent crude oil for July settlement fell as much as $3.23, or 2.4 percent, to $131.79 a barrel on London’s ICE Futures Europe exchange. It traded at $132.20 a barrel at 1:42 p.m. local time. It rose $4, or 3.1 percent, to $135.02 a barrel yesterday. Prices climbed to a record $138.12 on June 6. The July Brent contract expires tomorrow. The more-active August future was at $134.19 a barrel, down $2.07. “The high volatility of the last days could indicate that the end of the oil price rally could be seen in the near future,” said Gerrit Zambo, a trader for BayernLB in Munich. “Nevertheless, the probability of another spike to $140 to $150 a barrel still seems to be quite high.” U.S. crude supplies fell 4.56 million barrels to 302.2 million last week, the Energy Department said yesterday, three times what was forecast in a Bloomberg News survey. Inventories have dropped 7.2 percent since May 9. A proposed strike by Chevron Corp. employees in Nigeria is threatening to halt as much as 350,000 barrels a day of crude production and 14 million cubic feet a day of natural gas from the company’s 32 fields in Nigeria. Nigeria’s senior white-collar oil workers’ union is making a final effort to avoid a strike during talks with Chevron’s local unit, an official said. “The talks are not going well,” Lumumba Okugbawa, deputy secretary general of Petroleum & Natural Gas Senior Staff Association of Nigeria, or Pengassan, said. The strike could come as early as tomorrow should talks break down, he said.

Italian energy group Eni is paying £210m to take control of a North Sea field which it plans to turn into Britain’s biggest gas storage facility. Eni is buying Tullow Oil’s 52% stake in the Hewett Unit field, taking its overall stake to 89%. The deal comes as the latest estimates on energy supplies for next winter highlight the importance of gas storage in meeting the UK’s energy needs. The Hewett field is strategically close to the Bacton terminal, a key access point for bringing gas into the UK and Eni is planning to turn it into a storage facility which would be capable of holding up to 5bn cubic metres of gas by 2013. According to Eni, that would double Britain’s existing gas supply and represent more than 5% of annual gas demand. Gas storage has become an important part of energy policy as the UK becomes increasingly dependent on imports as North Sea output has declined. Storage facilities allow companies to buy gas in the summer months when demand is less and prices weaker, for sale during the winter. There has been concern within the industry that Britain lags well behind other European countries in storage capacity – a legacy of the era when Britain was able to rely on the North Sea to cope with any change in demand. Industry regulator Ofgem said: “If the Hewett gas storage project goes ahead it will more than double Britain’s long-term gas storage capacity and will be a welcome development … there is over 2bn cubic metres of gas storage under development, which should be ready by 2012.” Ofgem published the National Grid’s preliminary consultation on the availability of gas and electricity supplies next winter. According to National Grid, electricity supplies will be able to meet market demand with a spare capacity margin of 26.8% – higher than in recent winters.

A consultation by the National Grid on the UK’s winter gas and electricity supply has forecast possible problems in attracting liquified natural gas (LNG) because of higher prices overseas, while gas from Norway may be diverted to the continent, according to UK energy regulator Ofgem. A failure to attract LNG could be coupled with Norwegian producers diverting extra flows of natural gas to mainland Europe through the Langeled pipeline, as happened in winter 2007-2008, Ofgem said. The UK increasingly has to compete with Europe and other countries such as Japan for LNG, as prices abroad are traditionally higher. The regulator forecast an increase in gas import capacity if two LNG terminals in south Wales are completed on schedule. The existing Isle of Grain LNG terminal is due to be expanded for this winter. In electricity, National Grid said supplies will be able to meet demand during the winter and that there will be a spare capacity margin of 26.8 per cent, which it is says are higher than in recent years.

Every day we hear that Britain is facing a ‘fuel crisis’. The world oil price breaks records every week. The cost of petrol and gas soars. Foreign suppliers of gas and oil are holding Britain to ransom and charging exorbitant prices. The average family, we are told, faces fuel bills of £1,500 a year. Yet all this pales into insignificance compared with the real energy crisis roaring down on Britain with the speed of a bullet train as, within six or seven years, we stand to lose 40 per cent of all our existing electricity-generating capacity. Thanks to decades of neglect and wishful thinking by successive governments – and now the devastating impact of a directive from Brussels – we are about to see 17 of our major power stations forced to close, leaving us with a massive shortfall. Even after 2010, the experts say our power stations cannot be guaranteed to provide us with a continuous supply, meaning that we face the possibility of power cuts far worse than those which recently – largely unreported – blacked out half-a-million homes. By 2015, when the power stations which meet two-fifths of our current electricity needs have gone out of business, we could be facing the most serious disruption to our power supplies since the ‘three-day week’ of the 1970s. But the impact of such power cuts on the Britain of today would be far more damaging than they were in the time of Edward Heath 35 years ago. Compared with then, our dependence on continuous electricity supplies is infinitely greater – thanks, above all, to our reliance on computers. We are no longer talking just about factories shutting down or lighting our homes with candles. Without computers, our entire economy would grind to a halt. Scarcely an office, shop, bank or hospital in the land would be able to function. Our railway system would be immobilised. Road traffic would be in chaos as traffic lights ceased to operate and petrol stations closed down. Yet this is the scale of the catastrophe which may be facing us, thanks to the failure of government to give Britain a proper energy policy. Scaremongering? Just look at the hard facts. At the moment, to meet Britain’s peak electricity demand, our power stations need to provide a minimum 56 gigawatts (GW) of capacity. Ten gigawatts, nearly a fifth, comes from our ageing nuclear power stations, all but one of which are so old that over the next few years they will have reached the end of their useful working life. On top of that, however, we shall also have to shut down nine more major power stations – six coal-fired, three oil-fired – forced to close by the crippling cost of complying with an EU anti-pollution law, the so- called Large Combustion Plants directive. This will take out another 13GW of capacity, bringing the total shortfall to 22GW – a staggering 40 per cent of the 56GW we have today. Waking up at last to the scale of the abyss that is yawning before us, our Government – not least Prime Minister Gordon Brown – has realised the only way to avert this disaster must be to build as fast as possible at least 20 new power stations, gasfired, coal-fired or nuclear. Part of the cause of this crisis was that, for more than two decades, we went for gas-fired power stations, in the days when we still had abundant supplies of cheap gas from the North Sea.

But that is fast running out. Within 12 years, we shall have to import 80 per cent of our gas, at a time when world prices are soaring – and it would be folly to become over-dependent for our energy on countries as politically unreliable as Mr Putin’s Russia, where gas is produced. Building new coal-fired stations might have made more sense if we hadn’t closed down most of our own coal industry, and if this didn’t now involve the colossal extra costs imposed by the new EU rules. As we saw from the recent response to a proposed new coal-fired plant in Kent, any mention of coal-burning has the green lobby screaming up the wall. As the Government itself has belatedly recognised, by far the most sensible way to try to fill the gap would be to build a new generation of nuclear power stations. But how on earth is this to be done? There are only a handful of companies equipped to build these nuclear power plants, and countries all over the world are queuing up to place their own orders. Until October 2006, the British Government itself owned one such firm, Westinghouse, but in an act of supreme folly we sold it to Toshiba in Japan for a knockdown £2.8 billion – and it has 19 new orders on its books already. Our best hope, it seems, is the state-owned French company EDF (ElectricitÈ de France), which has recently been bidding to buy British Energy, owner of almost all our existing nuclear power stations.

These would provide the most obvious sites on which to build new ones. France, of course, went for nuclear energy in a big way just when we were retreating from it – having been world leader for 20 years – and currently derives 80 per cent of its electricity from 58 nuclear power stations. But with such a worldwide demand for new nuclear power, what chance is there that even EDF could provide enough reactors to meet our needs, when building each new one might take ten years or more? Yet another reason why we have allowed this mindbogglingly serious crisis to creep up on us has been the obsession of those who rule us – both in London and in Brussels – with ‘renewable’ energy. Incredibly, we are ‘obliged’ by the EU, within 12 years, to generate no less than 38 per cent of our electricity from renewable sources – such as tens of thousands of wind turbines – when currently only 4 per cent comes from renewables, with wind farms providing barely 1 per cent. As our Government privately recognises, we have no hope of achieving even a fraction of that target (we would anyway need to build a mass of new conventional power stations simply to supply back-up when the wind is not blowing). Whichever way it is looked at, Britain is threatened by what, thanks to years of dereliction and misjudgment, has become arguably our most serious potential crisis of modern times. Politically, the blame for this astounding mess lies in all directions – with the Tories, with Labour, with Brussels, with those smugly shortsighted ‘environmentalists’. But all that matters now is that we put the need to avert this disaster right at the top of our national political agenda. We need to get on with solving as terrifying a problem as our politicians have ever faced.

Russia’s Gazprom, the supplier of a quarter of Europe’s natural gas, expects the price of crude oil to almost double as the decade draws to a close, taking gas prices with it. “We think it will reach $250/bbl in the foreseeable future,” Chief Executive Alexei Miller told reporters at a presentation in France. Officials said the prediction was for 2009. Alexander Medvedev, deputy CEO of Russia’s dominant gas group, said gas prices for Europe would rise to reflect the cost of crude. Europe’s gas prices are mainly based on long term contracts and tied to price of crude. The comments came as the oil price sat at around $134 a barrel, a few dollars short of last week’s record level. Gazprom, already the world’s largest gas producer with a stock market value of over $330 billion, expects to triple in size to become a $1 trillion company within seven to 10 years. It will be investing heavily to that effect, with total investments estimated at $30 billion for 2008 and set to rise in the years after that, company officials said. Medvedev sought to allay concerns that the company’s European investments might be politically motivated, and said EU efforts to diversify its gas supplies would not solve anything. “Why should we invest money to create the possibility to shut off the gas supply,” he said at the presentation in the resort town of Deauville in northern France. Gazprom sells the EU around a quarter of its gas and wants to raise this to around a third. Brussels has sought to diversify supplies to avoid over reliance on Russia and improve the security of energy supplies. “If you diversify suppliers, it will not solve the problem,” Medvedev said. He also said Gazprom will only consider investing in Russian oil major TNK-BP after shareholders BP Plc and a group of Russian billionaires have settled a dispute over ownership.

Industry sources say Gazprom is interested in buying control of TNK-BP, where the world’s third-largest non-government controlled oil company by market value, BP, is locked in battle with its Russian oligarch partners over control of the joint venture. Earlier, Miller told a French newspaper that by 2020, Gazprom sees about half of its gas production coming from new fields in arctic seas, Yamal peninsula in Western Siberia and the Far East. “By then (2020), about half of gas production will come from new fields on the continental shelf of arctic seas and from the Yamal peninsula in Western Siberia and the Far East,” he told told Le Figaro newspaper. The Russian gas producer also said it aimed to become a major player in France and targeted corporate customers. Miller said Gazprom did “not exclude” making major acquisitions in France but organic growth was the priority for now. The company has indicated it would like to buy more gas pipelines and storage facilities across the continent and some EU politicians fear the gas giant’s westward expansion will allow the Kremlin to exert more control over Europe’s energy markets.

Wholesale gas prices today rose through the £1 per therm threshold for the first time, compounding fears that UK consumers are set for a fresh round of fuel price hikes. The price of gas for delivery during the first three months of 2009 touched 100.93p, up 5%compared with Friday’s close. Wholesale gas prices for next winter are now more than double last winter’s average of 48p. Power prices, which are closely linked to gas, also rose further this morning to £88.25 per megawatt hour for the coming winter, compared with a previous £50. Gas has breached the £1-a-therm mark despite the summer months, a time when supplies tend to be cheaper. The spike has been driven by the soaring price of crude oil, which hit a record of more than $139 a barrel on Friday amid fears of rising tensions between Israel and Iran. Oil prices have since fallen back slightly. The majority of global gas contracts between the producers and their customers are indexed to oil. With supplies from the North Sea running out, the UK is a major importer of gas. Around 27% of supplies were imported last year but this is expected to rise to around 40% this year. Last winter, a number of energy providers introduced double-digit increases on household bills, including British Gas which lifted gas and electricity prices by 15%. A spokesman for Centrica, owner of British Gas, said: “We’re having to buy in a world market and pay world prices.” He said that UK prices for next winter are similar to those being paid in Japan, the world’s biggest importer of gas. Until recently, the previous record UK gas price on the forward market for a winter period was 88p in April 2006 in the run up to the winter of 2006-07. Industry sources say that a fresh round of price increases are probably inevitable, with August tipped as the most likely time frame.

Fears of a new Middle East conflict have marked new heights for oil prices after the Israeli regime threatened to attack Iran. Israeli deputy prime minister Shaul Mofaz on Friday declared that “If Iran continues its nuclear weapons program, we will attack it.” New York’s main oil futures contract, light sweet crude for July delivery, leapt 10.75 dollars a barrel, its biggest one-day jump ever, to close at a record 138.54 dollars, AFP reported.

In London, Brent North Sea crude for July crossed 138 dollars for the first time and hit 138.12 dollars a barrel. It eased back to settle at 137.69 dollars, up 10.15 dollars. But light sweet crude in New York went above the USD 139 mark on the back of Morgan Stanley’s prediction oil would be selling for USD 150 per barrel by July.

Antoine Halff, an analyst at Newedge Group, said: “The Mofaz comments bring home the point that the dispute over Iran’s nuclear program remains unresolved and that the risks of military confrontation are indeed increasing. “This will likely be a growing source of market volatility until a solution to the dispute is found,” he added.

Oil has surged this year in part due to an influx of cash from investors seeking a hedge against the weaker dollar and inflation. The greenback weakened against other currencies on data showing the U.S. economy lost jobs for the a fifth straight month and the unemployment rate shot up to its highest in more than three years. The drop added to losses from Thursday when European Central Bank President Jean-Claude Trichet said a number of policymakers wanted higher interest rates, possibly as soon as next month, stoking a $6 jump in crude. Further support came from remarks by Israel’s transport minister that an attack on Iran’s nuclear sites looked “unavoidable,” the most explicit threat yet against Tehran from Prime Minister Ehud Olmert’s government. Worries of a potential disruption of the OPEC member’s crude supply have helped support prices over the past year. “Trichet is making the situation a lot worse than it would’ve been,” said Phil Flynn, analyst at Alaron Trading in Chicago. “The unemployment report looks all the more ominous. And any talk of war with Iran will set the bulls on fire.” Morgan Stanley forecast the diversion of Middle East oil shipments away from the United States to Asian markets could push U.S. crude to a $150 a barrel by the U.S. July 4th holiday. “Middle East oil exports are stable, but Asia is taking an unprecedented share,” Morgan Stanley said in a report, adding U.S. inventories have dropped by 35 million barrels since March.
“Robust Asian non-OECD demand growth, coupled with a stagnant global oil supply backdrop appears to be pricing out Atlantic basin consumerers while at the same time driving Atlantic inventories to critically low levels.” The report added to a string of upward price forecast revisions by analysts, with Goldman Sachs in May predicting prices could tip $200 a barrel within the next two years. A six-year rally in oil has sent prices up six-fold as demand from emerging economies such as China and India strain supplies. High prices have started to eat away at global growth however, with some consumers such as the United States and the United Kingdom showing signs of lowering consumption.