Oil stayed above 50 dollars a barrel on Wednesday as jittery stock markets fell and economists warned the record prices could sharply cut Asia's economic growth, slash investments and fuel inflation.
They said high oil prices are here to stay as supply comes under relentless pressure from surging global demand, especially in China, and wide-ranging threats of disruption.
Rebel threats to attack oil facilities in Nigeria, hurricane damage to oil platforms in the US Gulf Coast, instability in Iraq and the financial and legal woes of Russian oil giant Yukos have all conspired to push prices higher.
At 3:50 pm (0750 GMT), New York's reference light sweet crude oil for November delivery was at 50.05 dollars in after hours electronic trading at the New York Mercantile Exchange, up from its close of 49.90 dollars on Tuesday.
"We expect oil prices to remain high with continued upside risks to the end of 2004 and into 2005," Barclays Capital said in a report.
"With global oil demand now beginning to ramp up towards its seasonal maximum, an already stretched logistical system is about to become even tighter.
"The ability of that system to meet technical or political supply-side interruptions is now at its lowest for more than 30 years ... Should there be another shock, then prices will set another series of historic highs well above 50 dollars."
Asian stock markets continued to reel Wednesday from the impact.
Japanese share prices closed 0.27 percent lower, Taiwan fell 0.67 percent and the Philippines ended 0.23 percent weaker.
Singapore's Straits Times Index had shed 0.83 points by the end of the morning session.
"There is growing concern over the effect of higher oil prices on corporate earnings. Some companies will be hit harder than the others," a dealer with a Singapore brokerage said, pointing to the airlines and other transport companies.
Economists said high oil prices also threaten to slow Asia's growth, raise consumer prices and dampen domestic consumption.
Falling private sector spending, especially in a large market like the United States, will dampen demand for Asian exports.
The Manila-based Asian Development Bank said that in the likely scenario of sustained oil price rises, developing Asia's gross domestic product (GDP) growth could be pared down by 0.8 percentage points.
Inflation would rise 1.1 points and the trade balance would swing to a deficit equal to 0.4 percent of total output.
"If oil prices are going to persist at 50 dollars per barrel, there are going to be some important downsides that are going to result," ADB chief economist Ifzal Ali told AFP in Manila.
Clark Winter, the chief global investment strategist of Citigroup Private Bank, said in a recent report that a growth explosion in China and India had stoked "an almost insatiable demand" for oil and gasoline to keep cars, trucks and industries running.
China, for example, is forecast to have 140 million cars on its roads by 2020, implying a seven-fold increase in gasoline consumption from the current 383 million barrels a year, he wrote last week.
Increasing demand from India, Eastern Europe and Latin America could further strain oil supplies, he added.
Barclays Capital estimated that current global spare capacity has fallen to less than one million barrels a day from more than 6.5 million barrels a day in 2002.