Oil prices have risen to new highs today on fears that rapidly increasing demand for fuel could outstrip supply.

US light crude hit $41.72 a barrel in pre-opening dealing on the New York Mercantile Exchange, the highest price since Nynex began trading oil in 1983.

In London, Brent crude oil futures also rose, climbing 40 cents per barrel to $38.24 by midday.

The rise is weighing on stock markets around the world, since economists say oil prices could cramp global growth.

London's FTSE 100 share index, for example, was down 64.4 points at 4377.4 by noon - pressured also by news of a particularly severe bomb blast in Iraq.

Tokyo shares closed down more than 3%, and the dollar fell by 1.2% against the euro, which traded as high as $1.2021.

Purnomo Yusgiantoro, president of producers' cartel Opec, said today the organisation could shortly agree to increase production in order to fight off a slowdown in global growth.

"High oil prices can cause recession. We are not happy with high oil prices," he said.

Mr Yusgiantoro said Opec members may back higher production quotas when they meet at an industry conference on 22 May, although he stressed that there would only be a deal if all Opec ministers attended.

The cartel is not due to discuss output levels officially until its next full meeting on 3 June.

But many analysts fear that an increase in Opec's output ceiling would do little to curb oil prices, pointing out that the cartel is already producing two million barrels a day above its current quota.

Oil prices have risen by about 25% since the beginning of the year, lifted by strong demand in fast-growing China, unexpectedly low stocks in the US, and worries that instability in the Middle East may disrupt supplies.

Oil prices last rose to comparable levels during the run-up to the first US-led invasion of Iraq in 1990.

However, in real terms, they remain far below the levels seen during the oil price shock of the late 1970s.