Oil hits fresh high amid fears it could break $200

Oil prices held near two-and-a-half year highs yesterday, with Brent crude topping $122 a barrel after warnings that it could reach between $200 and $300 amid geo-political jitters.

It came as North Sea oil producer EnQuest pumped out stellar maiden results for 2010 after being spun out of Aberdeen-based oil and gas services firm Petrofac and Sweden's Lundin Petroleum last year.

EnQuest, whose underlying profits leapt to $169.4 million (104m) in 2010 compared with $24.6m in 2009, benefited from higher average oil prices and a 55 per cent leap in production.

In the wider oil market, fears grew of a lengthy loss of oil exports from Libya. Brent crude for May was $1.02 at $122.08 a barrel after closing at $121.06 a barrel on Monday, the highest level since August 2008. US crude was 47 cents lower at $108 a barrel after settling at $107.78 on Monday, its highest level since September 2008.

"It's looking over-bought and we might see a bit of a correction now, but now that Brent has broken above $120 it's hard to put a top on it," said Rob Montefusco, an oil trader at Sucden Financial.

Yesterday's fourth Chinese interest rate rise since October briefly saw the oil price fall about $1. But then markets pared the bulk of losses on reports that a Nigerian general election postponed by a week had sparked angry protests in the major African oil-producing nation.

"The market doesn't seem that bothered about Chinese interests rates any more, which seems totally crazy to me," said David Morrison, a strategist at GFT.

Meanwhile, former Saudi oil minister Sheikh Zaki Yamani claimed the US would continue to be dependent on exports from Saudi Arabia, despite the plans announced last week by US president Barack Obama to cut American oil imports by a third over the next decade.

Yamani said oil prices could hit between $200 and $300 a barrel if Saudi Arabia is hit by serious political unrest.

EnQuest's oil production last year rose to an average 21,074 barrels of oil equivalent per day (boepd) as new production wells came onstream at its key Don oil fields. That compared with 13,613 boepd in 2009.

The company, led by chief executive Amjad Bseisu, also ramped up its production targets for this year, despite the recent windfall tax in the Budget on North Sea oil companies. It is targeting 26,500 boepd for 2011.

Shares in EnQuest closed unchanged at 137.6p. It is not paying a dividend. Bseisu said: "In our first year as a listed company, EnQuest has performed well against its key objectives."