WASHINGTON -- The price of oil rose to its highest level in more than 13 years on Monday as traders responded to the weekend killing of five Westerners working for an oil contractor in Saudi Arabia.
The wholesale price of gasoline also reached a new record, signaling the likelihood of even higher pump prices by Memorial Day, which marks the beginning of the summer driving season.
Crude for June delivery gained 83 cents on the New York Mercantile Exchange, settling at $38.21 per barrel - the highest price since Oct. 16, 1990, when oil was valued at $38.89 per barrel.
The rally in oil prices was largely triggered by the violence in Saudi Arabia on Saturday, when four men opened fire on the offices of oil contractor ABB Lummus Global Inc. Two Americans, two Britons, an Australian and a Saudi died in the attack. All four attackers - who police said were Saudi brothers - were killed.
"This is the second consecutive weekend that key Mideastern oil installations have come under assault," Tom Kloza, director of Oil Price Information Service, said, referring to an attack a week earlier against Iraqi oil facilities.
On Monday, unleaded gasoline futures increased 2.7 cents to $1.263 per gallon - the highest settlement on record since the contract started trading in December 1984.
"We've gotten ourselves into a big-time speculative market," said Ed Silliere, an analyst at Energy Merchant LLC.
Silliere said speculators buying oil on Monday cited growing fears that terrorists who wish to topple the Saudi government could escalate their attacks against the oil industry and potentially disrupt supplies.
The run-up in oil prices makes it more expensive to produce gasoline, which already averages $1.84 per gallon at the pump nationwide, according to the Energy Department.
Analysts say motor fuel supplies are tight because of strong demand, limited domestic refining capacity and government regulations requiring more than a dozen different blends of cleaner-burning gasoline for summer.
In other Nymex trading, the price of heating oil for June delivery rose 2.3 cents to 96.79 cents a gallon, while natural gas futures soared 35.8 cents to $6.22 per 1,000 cubic feet.
In London, Brent crude from the North Sea gained 10 cents to $34.48 per barrel.