With the prospect of another hurricane grinding its way over the oil-rich Gulf of Mexico for the second time in three weeks, world crude prices surged, and President Bush gave warning of another potentially devastating strike on New Orleans.

Tropical Storm Rita is set to become a powerful hurricane by the time it reaches the Gulf this week and crude was up $4.39 to $67.39 a barrel on the New York Mercantile Exchange by lunchtime. It was the largest-ever rise in dollar terms. US crude oil futures rose by $4 a barrel and US shares slid with the spike in oil prices.

Chevron and Shell announced precautionary evacuations of Gulf facilities, as conducted three weeks ago before Hurricane Katrina, after which oil production still remains down by 56 per cent and natural gas output down by 34 per cent.

The Florida Keys area was braced for Rita, which pounded the southern Bahamas yesterday morning. It was expected to have strengthened to a hurricane by the time it hits the chain of islands on Florida’s southern tip, with a potential 8ft (2.4m) sea surge.

Governor Bush, the President’s brother, said: “I urge people to take this storm seriously.” Although Florida is immediately threatened today, the White House is watching tracking maps that predict that Rita could hit the Louisiana coast this weekend, as a probable Category 3 hurricane.

Ray Nagin, the New Orleans Mayor, heeded President Bush’s call not to let people return. “Our levee systems are still in a very weakened position and our pumping stations are not at capacity,” he said.

“I am encouraging everyone to leave. If we have anything above nine inches of rain and a three-foot surge we will again have flooding in the east bank of New Orleans.”

Mitch Frazier, spokesman for the Army Corps of Engineers, said that about 20 per cent of the city was still flooded, down from about 80 per cent.

Even as Mayor Nagin spoke, police manning roadblocks around the city began turning away vehicles, telling anyone without emergency permits they would not be allowed to enter. Huge traffic jams soon built up on roads.

Mr Nagin’s announcement came amid controversy over whether he had allowed people back into Orleans Parish too soon. “We were just wanting them to come in, have a look at what they lost and what they have left,” he said.

The death toll from Katrina last night reached 970, after another 90 bodies were found.

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