Oil set another record high today, climbing to within a whisker of $120 a barrel as traders fretted about the closure of the Grangemouth refinery in Scotland and disruptions to crude output in Nigeria.

It even shrugged off a rally in the dollar, in which oil is priced. The slide in the dollar in recent years has been key to the rising value of crude as producers demand greater compensation for the falling greenback.

The price of a barrel of US light crude rose by $1.50 a barrel to as high as $119.93 during London trading, but later dipped slightly as dealers took profits. London Brent crude was up 71 cents to $117.05.

The president of oil producers' cartel Opec, Chakib Khelil, blamed dollar weakness for the high prices and said he could not rule out a rise to $200 a barrel.

"Without geopolitical problems and the fall in the dollar, the prices of oil would not be at this level," he was also quoted as saying in Algerian newspaper El Moudjahid.

Oil prices are up almost a quarter since the start of the year and have risen sixfold in the past six years. Some analysts predict further rises, spelling more pain for motorists but making alternative forms of energy relatively cheaper.

Rising oil prices have been a key factor pushing up inflation rates in many countries. Petrol pump prices have repeatedly set records and look like breaking through £5 a gallon across Britain, a level already reached in many parts of the country.

Website petrolprices.com said the average price of fuel rose for a 15th consecutive day today to a record 109.8p a litre for petrol — £5.15 a gallon — and 119.8p a litre for diesel. Prices are up 10% this year.

Petrolprices.com founder Brendan McLoughlin predicts pump prices could reach £1.50 a litre by the late summer.

Today, crude prices were buoyed by news that ExxonMobil had shut all of its Nigerian oil production of about 800,000 barrels per day since last week due to a strike and attacks by rebels.

Crude has been underpinned for years by ongoing supply problems around the world, with the global economy enjoying its best growth period for three decades and pushing up demand, especially from countries such as China and India.

Experts question whether there is enough oil in the ground or whether global output may be at a peak and about to decline, but Opec refuses to pump more, blaming western "speculators" for price rises.

Markets were on tenterhooks as to whether the US central bank, the Federal Reserve, would cut interest rates on Wednesday — following a mid-March reduction from 3% to 2.25% — to bolster the flagging US economy. If it does, that is expected to further undermine the dollar and lift oil prices again.

"The Federal Reserve will have a chance to bolster the dollar if it decides to hold the line on further rate increases," said Edward Meir, analyst at MF Global. "Both developments could induce a correction in energy prices later in the week, but for now the trend appears higher still."