New York's main oil futures contract, light sweet crude for July delivery, hit a record high point of $139.89 (£71) a barrel.

That surpassed the previous high of $139.12 dollars set on 6 June.

The price later fell back slightly to trade up $4 at $138.86 a barrel on the New York Mercantile Exchange.

On Sunday, Saudi Arabia had said it would increase its oil production by 200,000 barrels a day next month in a move to meet growing world demand.

That would make a total rise of 550,000 barrels a day, or over 6%, since May this year, and would take Saudi output to its highest monthly rate since August 1981.

The news was announced after UN Secretary General Ban Ki-Moon met Saudi Oil Minister Ali al-Naimi in Jeddah for talks on the high oil price.

Last month, the Kingdom increased its production by 300,000 barrels a day.

The country is thought to be the only oil producer with the ability to pump substantially more crude.

It argues that the current high prices are caused by speculators rather than any shortage of crude oil.

Oil prices had fallen by almost $2 on Friday after reports that Saudi Arabia might boost oil production.



BBC