An Iranian technician works at the Balal offshore oil platform in the Gulf waters in 2004. (AFP)

World oil prices resumed a record-breaking rally, coming within a whisker of 61 dollars, after a hardline conservative was voted president of major crude producer Iran.

New York's main contract, light sweet crude for delivery in August, climbed 70 cents to close at 60.54 dollars a barrel, a new high. It earlier reached a record intra-day peak of 60.95 dollars.

In London, the price of Brent North Sea crude oil for delivery in August ended up 94 cents at a record-high 59.30 dollars a barrel, having earlier reached 59.59.

The conservative Mahmood Ahmadinejad thrashed the more moderate cleric Akbar Hashemi Rafsanjani in Iran's presidential election, sending shockwaves around the world despite his assurances of moderation.

"Although the election of the hardliner was anticipated, it caught some people by surprise that he did as well as he did," AG Edwards oil analyst Bill O'Grady said.

Many in the market are afraid that foreign oil companies will now be shut out of Iran, the second-biggest member of the Organisation of Petroleum Exporting Countries (OPEC) after Saudi Arabia.

"In the oil fields, the priority will be with domestic constructors, specialists, investors and workers," Ahmadinejad said.

Foreign firms are currently allowed to take only a maximum 49-percent stake in oil contracts and an Iranian firm must lead the consortium .

"It could be that they want to export less oil to the United States," Bache Financial trader Christopher Bellew said following the election result.

"Also they're talking about continuing with their nuclear programme, so it raises the tensions in that part of the world. The Americans certainly won't be happy with this new regime."

The United States, the world's biggest oil consumer, has accused Iran of being the world's leading state sponsor of terrorism and has labelled Tehran part of an "axis of evil".

After eight years of often conciliatory diplomacy, Ahmadinejad on Sunday abruptly put a stop to any more talk of dialogue with Washington.

"Iran is on a path of progress and elevation, and does not really need the United States on this path," the former Tehran mayor told his first news conference since winning the presidency.

His victory reinvigorated fears that dominated oil trading last week of supply shortfalls come the northern hemisphere winter, when demand for heating oil will peak.

"People are getting more and more concerned about the second half (of the year)," Investec analyst Bruce Evers said.

"OPEC is going to be very stretched in the fourth quarter to meet demand. I think we could see 65 dollars, 70 dollars quite quickly," he said.

O'Grady, however, said prices can only go so high before economic reality bites. "Higher oil prices should bring at some point some economic weakness," which would hit demand for crude, he said.

The developments in Iran overshadowed reassuring noises from OPEC's president, Kuwaiti Energy Minister Sheikh Ahmad Fahd al-Sabah.

He said he was still discussing with the cartel's ministers the possibility of raising output by 500,000 barrels per day to stabilise prices.

"If we find there is a shortage in the market I think they will approve releasing the 500,000. I think this week we will reach a solution," he told reporters.

Other analysts noted that US crude oil inventories, a key gauge for market sentiment released every Wednesday, are nearly 10 percent above year-ago levels, which would suggest that supplies are plentiful.

Tim Evans, a senior analyst at IFR Markets, said "the (price) bubble can pop at any point here from simply exhaustion".

Overall, "the market really only has to come back to its senses", he said. 

(Agencies)

consortium: an association of companies for some definite purpose（社團(tuán)，協(xié)會(huì)）

reinvigorate: impart vigor, strength, or vitality to（使再振興，使復(fù)興）