Crude oil has soared from a low of $10 a barrel this time last year to reach $24.94 for January delivery in London on Wednesday.

At one point it went above $25.07 a barrel, above the previous high of $25.05 set in January 1991, just before the Gulf War when the invasion of Kuwait seriously disrupted supplies.

In New York later in the day, December light crude passed $26.00 a barrel.

Some dealers are speculating that oil could go as high as $30 a barrel during the winter season in the Northern hemisphere, when demand for heating oil is at its height.

The sharp rise in oil prices could spur inflation, which has been unusually subdued in many of the world's leading industrial countries, as boom conditions return.

"I think we can expect the same sort of levels of OPEC discipline until March," said Commerzbank oil analyst Lucy Haskins.

"The trend will be for stock levels to continue to fall which will be supportive for the crude price," she added.

OPEC ministers meet

Key oil ministers from the Organization of Petroleum Exporting Countries, whose 2.1m barrel a day cut in production led to the price rises, were meeting in Saudi Arabia, the world's largest oil exporter.

Ministers from Saudi Arabia, Venezuela and Mexico urged global crude producers to stick to agreed production levels in the face of fluctuating prices.

The ministers called upon all oil exporters "to continue the path of compliance to maintain the gains of cooperation and bring the market to a sustained stability."

They warned other oil producers not to cash in on the oil price surge and increase production.

"While the market fundamentals point to a more balanced market, speculative aspects are contributing to recent price movements which warrant caution and vigilance from all market participants," said a said a statement issued by Saudi Arabia's Ali bin Ibrahim al-Nuaimi, Mexico's Luis Tellez and Venezuela's Ali Rodriguez.

In the past, OPEC agreements have often been undermined by cheating from poorer countries.

But this time, analysts say that not only has the organization stayed together, there is now a good chance that the production cuts will be extended beyond their official expiry date of March 2000.

Some analysts argue that such a move could lead to serious problems next year.

Extending the production ceiling "could be quite dangerous because it would lead to a very tight market," said Dresdner Kleinwort Benson oil analyst Medhi Varzi.