Oil prices have risen above $140 a barrel on the New York stock exchange for the first time amid new warnings of future price rises and a Libyan threat to cut production.

US crude oil rose $5.50 to $140.05 a barrel in New York on Thursday afternoon, passing the record of $139.89 a barrel reached on June 16.

Earlier, Chakib Khelil, president of the Organization of the Petroleum Exporting Countries (Opec), had said oil prices could rise as high as $170 a barrel this year before declining later in the year.

Oil prices also rose on the London markets on Thursday, with crude oil rising $5.33 to $139.66 a barrel.

US stocks were down more than 350 points on Thursday following the news, with the Dow Jones Industrial Average closing at 11,457.41, its lowest level in two years.

Libya warning

Shokri Ghanem , Libya 's most senior oil official, said the country was studying options to cut its output in response to a possible US legal action against Opec.

Fuel costs have also risen in the US in response to high oil prices [EPA]
Ghanem said he was considering cutting production in response to a bill before the US Congress that would empower the justice department to sue Opec members for limiting oil supplies.

"We are studying all the options," Ghanem told Reuters.

"There are threats from the Congress and they are taking Opec to court, extending the jurisdiction of the US outside the US ," he said.

George Bush, the US president, has said he would veto the legislation if it were passed by Congress.

The House of Representatives passed the bill in May, but the Senate has yet to schedule a vote on the measure.

Oil prices have risen rapidly over the past six-years, driven by increasing demand from fast-growing economies like China and India .

Rising fuel costs have strained economies and spurred protests around the world, prompting Saudi Arabia , the world's leading oil producer, to pledge to increase output at a meeting between producer and consumer nations over the weekend.

Oil prices had fallen on Wednesday after US government data showed a rise in its crude oil stocks.