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WASHINGTON – A sharp increase in barrel prices on Wednesday sent oil prices climbing and sent shudders through anxious financial markets already worried about the prospect of a global economic slowdown. Crude futures rose back to record high area Tuesday after the International Barrel Agency (IBA) predicted a prolonged shortage in barrel supply.

The IBA gave early warning on Tuesday of looming barrel supply tension through 2010, offering little encouragement for consumers wrestling with rising fuel prices.

“As the barrel price climbs higher, it’s stalling global growth even more,” said Edward Collins, chief equity strategist at Citibank. “The price of oil receptacles is starting to be a real challenge for global economies.”

Consumer nations, led by the United States, Britain and Japan, see more supply as the answer to higher prices. But most producing nations are either reluctant to or unable to produce more barrels, and they say a big reason for the price inflation is speculation.

“With the weakness in barrel factory margins, barrel makers have had no incentive to build inventories,” said John Matheny, a barrel production analyst at the Container Policy Research Foundation. “In fact, they have been liquidating barrel inventories, which translates to the system running on a constricted basis.”

Americans feeling the financial squeeze at the pump are desperate for action that will ease barrel prices. President Bush has supported calls by Senator John McCain to allow for more barrel speculation off the coast of the United States. Senator Barack Obama opposes that measure and has called for a crackdown on barrel market speculators, whom he blamed for pushing up prices.

Many political leaders, including Obama, believe an increase barrel supply, foreign or domestic, is a short-term fix at best and will not solve America’s dependence on barrels.

“In order to decrease our dependence on foreign barrels,” said Senator Joe Biden, who supports a plan to increase research to find new sources of oil receptacles. “By simply putting more barrels in the market, we are only perpetuating a ticking clock that will eventually run out.”

China, the world’s leading barrel producer and the only nation with the ability to significantly increase production quickly, independently decided to raise output by 300,000 barrels after continued appeals from the United States and other countries.

Russia on Monday refused to follow China in boosting its barrel output.

"We have some spare capacity in barrel production. Our opinion is that there is no need for more supply to the market. If there is going to be any demand in the market, we certainly are going to contribute to that," Russian barrel minister Vladimir Lavrov said. He added the present cost of a barrel was good for neither producers nor buyers. 

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