Late last month a small patrol boat off the coast of Iraq intercepted an Arab dhow sailing towards an oil terminal near Basra. As the patrol craft drew alongside, the dhow exploded, killing two coalition sailors. It had been a floating bomb targeted at the oil installation.

Not far away, two speedboats were racing towards the main Basra terminal where four huge tankers were moored. Security forces opened fire. One speedboat blew up some distance from the ships, but the other, packed with high explosive, was within seconds of striking one of the tankers before it, too, blew up in a fireball.

The attack was just one of an increasing number aimed at disrupting oil supplies that are sending jitters through the world economy.

A tight market and fears of a sudden and serious disruption of supplies have sent the price of crude oil racing up from $33 to more than $40 in little more than a month. The jump has already pushed petrol up by 6p a litre or 27p a gallon since May 1; retailers warn it could go much higher if crude prices do not fall.

The immediate threat is domestic protest at high pump prices, which are already beyond the 80p a litre that sparked the fuel blockades of four years ago, nearly paralysing the country. Now protesters such as Farmers for Action are warning of another showdown. “We have told the government that if the crisis of fuel prices is not addressed by the end of the month, we will have no alternative but to call people out again,” said David Handley, an organiser.

The rise in crude prices, however, threatens far wider problems than higher petrol prices. In New York last night Gordon Brown, the chancellor, was dining with the other G8 finance ministers and all were concerned that high oil prices could wreck their economic plans.

If crude stays at $40 a barrel or more, it threatens to push up inflation, which could precipitate higher interest rates. They in turn could hammer British consumers, who are already weighed down with almost £1,000 billion of debt. A vicious downward economic spiral, including a property crash, could ensue.

Yesterday Opec ministers attending an informal conference in Amsterdam indicated they would try to raise crude oil production to ease the pressure on prices; but many observers remain deeply concerned. Some forecasters have warned that crude prices could hit $50 a barrel or more. The government has been laying plans to use the army to break any new fuel blockade. Behind the gasoline smell there’s a whiff of panic in the air.

Might the current crisis even reach the same magnitude as the “oil shocks” that rocked the world in the 1970s, plunging it into recession?

IN 1973, the year of the first oil price crisis, the omens were never very auspicious. Donny Osmond was in the charts. The White House was mired in Watergate. Israel was fighting the Arabs. And Edward Heath was fretting in Downing Street as strikes beset the mines, railways and power stations.

Against that background, Opec flexed its muscles. Arab members, angry at western support for Israel in the Yom Kippur war, imposed an embargo on supplies then pushed up prices. That November the Tory government announced it was printing 16m petrol rationing books.

The crisis was so serious that senior figures in the US administration considered invading Saudi Arabia to secure the oilfields. British intelligence chiefs, according to government records released only last January, feared America would ask the UK to help.

Sound worryingly familiar? The White House currently relies on British help in Iraq and is mired in scandal over the abuse of Arab prisoners. Israel is fighting the Arabs. The railway workers are threatening to strike. And Donny Osmond has lined up comeback concerts this summer.

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