THE world’s energy markets braced themselves for a second shock yesterday as Hurricane Rita edged closer to the Gulf coast of Texas, threatening oil refineries that account for a quarter of America’s fuel production.

Rita’s threat to a coastline jammed with oil infrastructure prompted a warning from the US Energy Information Administration (EIA) that 18 refineries lay in the path of the storm. With winds of 165mph, Rita is ranked Category Five, bigger than Hurricane Katrina, which last month knocked out 9 per cent of American fuel production.

Anticipating turmoil, traders pushed the price of crude oil up $2 per barrel in early trading in New York to $68 while natural gas hit a record high of $13 per million British thermal units.

In Washington, the International Monetary Fund gave warning that high oil prices presented a “clear and present danger” to economic prospects.

As the storm shifted course towards the industrial areas of Galveston and Corpus Christi, Valero Energy, a leading oil refiner, said that the storm could provoke a “national disaster”.

BP, Marathon Oil and Valero were among refiners that shut down or reduced operating rates at Texas refineries to prepare for Rita. BP could not say when the plant would reopen. “That all depends on Rita,” a spokesman said.

Hurricane Katrina caused the shutdown of nine refineries in Louisiana and Mississippi, sending a price shockwave from the US Gulf to Rotterdam, where it pushed the price of wholesale petrol to record levels. The impact of the storm is still keeping petrol prices high in Britain.

The EIA said that 23 per cent of total US refining capacity lay in the path of the storm. “While not all of this capacity would be affected under any scenario, it does point out how much refining capacity is at risk,” it said.

In an analysis of the oil futures markets, the IMF yesterday calculated a 20 per cent risk that the cost of crude oil could climb to $80 per barrel. The organisation’s new forecasts show average prices of $54.23 this year, rising to $61.75 next year. Strong demand for fuel and limits on supply and refining capacity would keep prices high, it said.

Separately, Kuwait confirmed yesterday that it would sign a memorandum of understanding to build a new refinery in the US, the first such investment since the mid-1970s. Speaking in London, Nawaf Nasir al-Sabah, general counsel of the Kuwait Petroleum Corporation, said that the Kuwaiti Prime Minister had made the proposal to President Bush in July. The investment depends on the US Government streamlining the permitting procedure.

Referring to the reluctance of American oil companies to invest, Mr al-Sabah said: “Someone asked: ‘Who would invest $2 billion in a refinery in the US?’ The answer is: ‘We are.’ ”

In London, the FTSE 100 share index fell 46.7 points to 5,369.7 on oil-price fears.

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