Fears that Saudi Arabia's plans to boost oil production will not be enough to meet strong demand have seen oil prices surge by more than $1 a barrel.
In trade in New York, Nymex crude broke through the $41 barrier rising $1.45 to $41.36 after having dipped to $39.93 on Friday.
Meanwhile, in London Brent crude jumped 90 cents to $37.41.
Earlier, Saudi Arabia promised to boost its output to 9.1 million barrels a day in an effort to stem record prices.
The offer to increase production by 800,000 barrels a day came just hours after the G7 group of rich states called for lower oil prices.
Opec split
Oil prices fell shortly after the Saudi move, but it was a brief respite as new worries quickly set in.
Barclays analyst Kevin Norrish said: "The concern is that it is not enough, or that it is too little too late."
Meanwhile, Saudi Arabia's unilateral move to increase production has split the oil cartel Opec.
"There are two worries here - that Saudi doesn't have explicit support for an increase and that spare capacity is so limited," Nauman Barakat, senior vice president at brokers Refco in New York, said.
Libya roundly attacked its fellow Opec member for refusing to delay its decision until the next Opec meeting on 3 June.
Following the announcement oil minister Fethi bin Chetwane told reporters: "They can't. It's a mistake. Saudi Arabia alone can't decide to increase production."
Meanwhile, Nigeria has suggested that the cartel may not be able to satisfy surging global demand.
Edmund Daukoru, presidential adviser on oil said: "I believe it is not how much we announce we are going to put on the market, it is how much spare capacity the market believes we have."
Very little spare
Algeria has also warned that a quota rise would legitimise leakage over official curbs, not lower prices.
Energy and mining minister Chakib Khelil said the market had already factored in about three million barrels a day of such leakage.
The cartel - which supplies about a third of the world's oil - targets daily output of 23.5 million barrels per day, but members are already pumping out an extra two million barrels a day - the equivalent of 2.5% of global demand.
As a result, any Opec increase would largely be met by Saudi Arabia as most other members now have very little spare capacity.
Scepticism
Analysts have also begun to fret that any additional oil will not hit the market in time, as the Saudi plans require the introduction of new oilfields.
Marshall Steeves, energy market analyst at Refco, said: "There is scepticism perhaps that the Saudis can increase production as much as they claim.
"It wouldn't take effect until July at the earliest, and any new marginal oil wouldn't get to the United States until some time in August. That wouldn't do much to allay summer concerns with respect to gasoline."
Other experts argued that any future increase by Opec would simply be gobbled up by rising global demand - driven by a healthier US economy and rapid growth in China.
At the same time, the US is trying to replenish stockpiles of petrol, and Asian nations are trying to protect themselves from future price shocks by establishing their own strategic reserves.
Security concerns have also added to the upward pressure on prices.
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