Royal Dutch Shell and BP, Europe's two largest oil companies, both saw first quarter profits jump thanks to record crude prices and higher natural gas prices.

Shell's first quarter profits rose 25pc to $9bn, while BP's profit soared to $7.6bn from $4.6bn in the same period.

Oil touched $100 for the first time in early January and reached $111.80 a barrel in March as a falling dollar spurred investors to buy commodities, while natural gas increased 22 percent on average in the first quarter.

The rising oil price squeezed refining profits as it outpaced gains for processed fuels such as gasoline and diesel. Crude touched a record $119.93 yesterday.

Shell chief executive officer Jeroen van der Veer is betting on Canadian oil sands and a gas-to-liquids fuel venture in Qatar to counter falling production from conventional oil projects..

At BP, chief executive officer Tony Hayward, who replaced Lord Browne a year ago, is bringing new production and refining capacity online to improve earnings.

The results from the oil majors come after the president of Opec has warned that the price of oil could hit $200 (£100) a barrel, spelling more pain for the major crude-consuming economies.

Chakib Khelil said there was nothing that the oil producers' cartel could do to bring down the high price, which he blamed on geopolitical tensions and market speculators.

His comments, coming as oil touched a record $120 a barrel on Nymex at one stage yesterday, are seen as rejecting pleas from America and Europe for Opec to turn on the taps and help rein in the price. Mr Khelil, Algeria's energy minister, said there is no evidence of a shortage of oil on world markets.