US light crude rose 42 cents to $44.24 a barrel, marking the highest level since crude futures were launched on the New York Mercantile Exchange in 1983. It later fell to trade around $44.05.

London's Brent crude peaked at $40.45 a barrel, its highest since the run-up to the first Gulf War.

Oil prices have surged by more than one-third since the end of 2003 on worries that accelerating global demand has left supplies tightly stretched with little leeway for disruption.

OPEC President Purnomo Yusgiantoro said Tuesday the cartel had no spare oil to hand to dampen prices.

"The oil price is very high, it's crazy. There is no additional supply," Purnomo told reporters in Jakarta.

"Minister Naimi has said Saudi Arabia can increase production but they cannot do it immediately," he said, referring to Ali al-Naimi, oil minister for Saudi Arabia, the world's number one exporter.

Saudi Arabia has said it would produce 9.5 million barrels per day (bpd) in August, which would be just one million bpd below the country's full capacity.

Purnomo's comments echoed those Monday of Algerian Oil Minister Chakib Khelil, who said OPEC had done all it could to stop this year's oil price rally.

"OPEC can do nothing," Khelil told reporters in Algiers.

Bailiffs have given Russia's largest oil company, YUKOS, one month to pay back taxes, but the company said Monday that the Tax Ministry had begun an investigation into its 2002 accounts.

YUKOS owes almost $7 billion in back taxes for 2000 and 2001 and analysts have said any bills for later years could bring the total toward $10 billion.

It pumps one fifth of production in Russia, the No.2 supplier after Saudi Arabia, but has had its bank accounts and assets frozen, raising fears that its sales may dry up at a time when global production is running close to full tilt.

"Stronger-than-expected demand has eaten into world spare capacity, which has been eaten into further by problems in Iraq. Now there is the uncertainty of YUKOS," said David Thurtell, commodities strategist at Commonwealth Bank of Australia.

Industry estimates indicate that OPEC, which accounts for about 40 percent of supply, is pumping close to 30 million bpd of crude for the first time since 1979.

The group, which raised its official production limits to 26 million bpd on Aug. 1, has been producing way over its self-imposed ceiling to try and dampen soaring prices.

The official limits exclude Iraq, where exports are expected to reach between 1.7 and 1.8 million bpd this month as operations recover from a series of sabotage attacks earlier this year.

Oil traders are nervous that strong demand is preventing global stocks from building ahead of peak winter demand.

The US Energy Information Administration (EIA) will release its weekly oil stocks report Wednesday, which is expected to show declines in national crude and gasoline inventories although distillate tanks are forecast to rise.

The weekly report is closely monitored as a barometer for demand in the world's biggest oil consumer.

Eight analysts surveyed by Reuters predicted the EIA would show a 300,000 barrel dip in crude stocks in the week to July 30 and a 600,000 barrel fall in gasoline inventories.

Distillate stocks, including key winter heating oil, were seen rising by 1.4 million barrels.