The price of black gold struck another fresh record yesterday at near $114 a barrel as traders sought a safe place to hide amid the continuing assault on the battered US dollar and mounting worries about global supply.

The immediate driver was a report from the International Energy Agency yesterday which said Russian oil production dropped this year for the first time in a decade, sparking concerns over whether the key oil-producing nation will have enough supply to help meet increasing global demand.

Meanwhile, crude oil shipments along one US pipeline were said to be moving below capacity, and Italy's ENI reported a 5000 barrel-per-day reduction in production at one of its facilities in Nigeria, Africa's biggest oil producer, after rebels caused a fire at the Beniboye oil plant.

At the same time, investors snapped up shares of BG Group and Spain's Repsol YPF after it emerged that an oil find off the coast of Brazil could turn out to be the world's third-biggest field.

The two companies are partners with Brazil's Petrobras in the exploration area off the coast of Rio de Janeiro.

Shares in BG, which has a 30% stake in the consortium exploring the Carioca field in the Santos Basin and may hold reserves of around 33 billion barrels of oil, yesterday climbed 66p to 1288p.

In spite of slowing economic growth worldwide, in particular in the US, oil prices are showing no signs of slowing.

US crude surged more than $2 yesterday to touch the new heights of $113.93 a barrel on the New York Mercantile Exchange, before settling back to $113.79 in late trading. London Brent crude hit its own new record yesterday of $111.85 a barrel, before ending $1.47 up at $111.31 a barrel on the ICE Futures exchange.

Higher energy costs are hurting business and consumers alike, and are adding to the woes of economies already smarting from a housing slump and a financial crisis.

On the forecourt, drivers may soon have to fork out yet more for petrol as oil continues to climb.

Motorists across the UK paid a record average of 107.94p per litre of unleaded yesterday, according to the AA. Diesel also cost a record 117.13p - or £5.32 a gallon.

The price of crude has risen about 18% from the start of the year and is averaging near the once unthinkable $100 a barrel.

The recent surge has taken oil well beyond its inflation-adjusted previous long-time high of $104.35, reached in 1864, the year of the Pennsylvania oil boom.

This time, demand - also fuelled by exploding growth in China and a steady increase from the US - has been another major driver behind a almost 500% surge in the oil price since 2002.

Over the past two years, China and India have accounted for about 70% of the increase in energy demand and the world's needs would rise 55% by 2030, according to a recent IEA report.

Some economic theorists believe that higher energy prices discourage consumers from spending on other products, which in turn slows growth.

The UK and the US have both blamed the Organisation of the Petroleum Exporting Countries (Opec) for record high oil prices that have exacerbated a global economic slowdown, but most analysts believe the causes for oil's rise almost certainly lie closer to home.

Prime Minister Gordon Brown and US President George W Bush, both struggling to boost their slumping popularity, have pressed Opec countries to open their taps to help ease oil prices.

However, most analysts agree that the price of oil is being driven more by a battered dollar, weakened by a US housing market collapse and credit crunch.

The dollar has plunged against the euro because of concerns about the US economy, and yesterday traded at $1.5762 against the euro, close to its lowest levels.

Sterling yesterday closed lower at $1.9611 in response to weaker-than-expected UK inflation figures.

Meanwhile, sterling fell to a record low against the euro as investors raised their bets on the chances of further rate cuts this year.

One euro yesterday bought 80.35p in late trading.

Opec itself has pointed to US dollar weakness, speculative inflows and political tensions as key factors driving prices rather than a lack of oil.

Olivier Jakob, analyst at Petromatrix, said: "Traditionally, speculators and Opec are an easy scapegoat, but I think it's totally unfair."

Richard Batty, an analyst at Standard Life, said: "One thing that is clearly driving the oil price is that the US dollar has gotten substantially weaker in the past several months and quarter.

"The volatility in asset markets - mainly equities - has pushed investors towards commodities."

The dollar held near record lows versus the euro yester- day ahead of US economic data and first-quarter earn- ings results from corporate heavyweights this week.

A weak dollar tends to raise prices for commodities denominated in that currency by boosting non-US spending power and by attracting investors seeking an inflation hedge.