There has been a near-term shortage of crude oil

Clay Smith Commerzbank

Increased demand and Opec cuts coincide with fitful oil exports from Iraq, which have fallen below the 2.5 million barrels a day expected by the market.

In London, the Brent North Sea crude for March delivery peaked on Thursday at $30.12 a barrel, before easing off at the end of the day to close at $29.92 a barrel.

On Friday morning the price of oil slipped slightly off the $30 mark to rest at $29.60 a barrel.

More spikes ahead?

And the markets could move even higher on the back of news that Indonesia will propose a cumulative production cut of up to two million barrels a day at the next Opec meeting in March.

Last year, the average cost of a barrel of Brent oil was $28.5 - and peaked at just under $36 - dramatically higher than in previous years. Two years ago, one barrel had traded under $10.

Rising oil prices have led to grave concerns about growing inflation and recession, especially for developing countries which cannot afford to pay the higher price of importing oil to fuel local industries.

It also led to widespread consumer protests about the price of petrol at the pump last autumn.

And Thursday's news that oil major Shell has reaped bumper profits of �9 billion - primarily due to the high cost of crude oil - will add to the heated arguments over oil prices.