OIL prices have reached a record high following warnings of possible terrorist attacks against US financial institutions.

The cost of crude surged to $43.92 a barrel in New York as the security alert hit a market already stretched by high demand and inadequate production.

It came only a day after the chairman of oil group BP warned that in the short term, any respite for motorists from soaring petrol prices was unlikely.

Lord Browne had warned prices were likely to remain high due to insecurity of supply across the world.

Analysts said the heightened security situation had an impact on yesterday's oil price, although it was largely driven by continued high demand.

The US government has warned of possible terrorist attacks against "iconic" financial institutions in New York City, Washington, and in Newark, New Jersey, saying intelligence pointed to a car or truck bomb.

It named the New York Stock Exchange as one of a number of potential targets.

Paul Horsnell, head of energy research at Barclays Capital, said this had added to a series of factors pushing prices higher. Other factors were a strong demand and a lack of spare capacity.

However, Investec oil expert Bruce Evers said the security alerts had a small impact on the cost of oil. He said oil prices were likely to stay at their current high levels even if the situation in Iraq changed.

Prices have risen in recent days on fears of a sharp slowdown in output by Russia as investors showed their concerns about a stand-off between Russian authorities and the country's largest oil company, Yukos.

Concerns have also grown over the ability of Iraqi security chiefs to protect oil installations.

Analysts have forecast that prices are likely to rise further ahead of winter, possibly to $50 a barrel.