Oil prices are now at 13 year highs

With last week's events in Spain still fresh in the mind of traders, the price of New York's benchmark light sweet crude surged 70 cents to $38.18.

This is the highest figure since 16 October 1990 - more than 13 years ago in the run up to the first Gulf War.

The upward pressure is also being driven by concern of low US stocks.

Production targets

It is at this time of the year that America usually stockpiles both crude oil and petrol ahead of its main consumption season in the summer.

Yet a number of recent official US government reports have said that stocks are currently at historic lows.

There is also uncertainty as to whether the Organisation of Petroleum Exporting Countries (OPEC) will stick to previously held plans to cut production quotas by around 4% from April.

Many analysts believe they will now change their minds.

In the UK the price of Brent North Sea crude also increased, rising 85 cents to close at $33.53.

Strong demand

"Obviously the terrorist bombing in Madrid increased the possibility of similar attacks and that has spooked the markets," said energy analyst Fadel Gheit.

Other analysts say the recovering world economy is another upward pressure on oil prices and it will be a while before they come down.