Oil prices topped 70 US dollars a barrel today as traders began to assess the hurricane damage at production and refining sites in the Gulf of Mexico.

Crude oil for October delivery surged during the afternoon to reach a new high of 70.85 US dollars, after earlier falling back to a more modest 67 US dollars.

The hurricane has shut down 90% of the Gulf's oil output and several refineries, as fears grow about the long-term impact on future oil supply.

While reports of damage to installations in the Gulf are still sketchy, Shell said an aerial inspection of its Mars platform revealed some ''top side'' damage at a site that produced around 147,000 barrels of oil a day last year.

The storm led to the evacuation of more than 700 offshore platforms and rigs and came when producers were struggling to cope with demand. The Gulf normally produces 1.5 million barrels of crude oil a day, or about a quarter of the United States' domestic output.

At least eight Gulf Coast refineries in the path of hurricane shut down or reduced operations on Monday, potentially affecting the supply of products such as petrol and heating fuel in America.

Gasoline and heating oil prices, which hit new closing highs on the New York Mercantile Exchange on Monday, continued their upward climb today.

In the UK, companies and motorists have been feeling the heat from record oil prices for some time, as the average price of unleaded stands at around 92p a litre and the typical monthly fuel bill nears £100.

Ray Holloway, of the Petrol Retailers Association, said the squeeze on refinery capacity in the United States could have a knock-on effect on the UK.

He said there had been hopes that the end of the summer driving season in the United States would result in an easing in the cost of fuel.

He added: ''In a nervous oil world the hurricane is inevitably going to have an impact on the barrel price.

''An awful lot of speculative money is going into the oil price, several dollars is just there for investment purposes.''

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