US oil prices have hit record highs after the president of Opec said the producers’ cartel was unable to push any more supplies into the market.

Prices rose to $44.24 a barrel in New York – a level not seen in the 21 years of the New York Mercantile Exchange’s oil contract – before dipping slightly.

Earlier, the president of Opec said oil prices were at “crazy” levels, but that Opec was powerless to cool the market.

“There is no more supply,” said Opec president Purnomo Yusgiantoro.

In London, the price of the benchmark Brent crude oil rose 69 cents in late trade to settle at $40.67.

New York’s light sweet crude ended at $44.15.

The recent run-up in prices also followed a US government warning about possible terrorist attacks on financial institutions and signs that a dispute in Russia between the government and the country’s biggest oil company could lead to disruption of supplies.

Parts of three US cities – New York, Washington DC, and Newark in New Jersey – have been placed on orange alert, the second highest level of preparedness.

The International Monetary Fund, the World Bank, and the New York Stock Exchange were all named as targets in US government alert issued on Sunday.

No easy answers

Opec’s president said that officials in Saudi Arabia, the world’s biggest oil exporter, had told him that that country could raise production, but not immediately.

“The oil price is very high. It’s crazy,” said Mr Yusgiantoro, who is also Indonesia’s oil minister.

Oil analysts agree that Opec is pumping flat out, so there is limited scope to calm prices by boosting output.

High prices are underpinned by soaring demand from fast-growing China and recovery in the US.

They are highly sensitive to any development which could affect the global supply situation, such as the attack warning, or instability in the Middle East.

Last week, they hit record highs on concerns that a multi-billion dollar tax demand against Russian oil giant Yukos might force it temporarily to suspend production.

Uncertain impact

John Brady, an analyst with ABN Amro, said that renewed fears of a major terrorist attack would continue to support prices for some time.

“The market is pinned to the upside when you look at the trend, ” he said. “The threat alert is bringing more confusion and uncertainty into the market.”

However, Tony Nunan at Mitsubishi Corporation in Tokyo, said that should an attack happen, prices would be more likely to fall.

“After 9/11 people stopped consuming because of the uncertainty… If the target is a consuming nation, you would expect an attack to affect the market to the downside,” he said.