Oil rose to a record above $125, set for the biggest weekly gain since March last year, as concern violence in Nigeria will cut supply spurred speculative buying.

Assaults in Africa's biggest producer have increased this month as U.S. demand for the country's crude starts to peak before the start of this summer's motoring season. OPEC said yesterday it doesn't need to increase supplies, even as its president warned prices may reach $200 a barrel.

"In the last couple of weeks attacks in Nigeria have been getting worse," said Andy Sommer, an analyst with HSH Nordbank in Hamburg. "Also, the view that oil can go to $200, even though everyone knows it's not the base-case scenario, is bringing in investor flows."

Crude oil for June delivery climbed as much as $1.43, or 1.3 percent, to $125.12 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $125.05 at 11:27 a.m. London time. Oil has risen 7.4 percent this week, the biggest weekly gain since March 23, 2007. Prices have doubled in the last year.

Brent crude oil for June settlement jumped as much as $1.60, or 1.3 percent, to a record $124.44 a barrel on London's ICE Futures Europe exchange. It was at $124.31 at 11:27 a.m. London time.

Royal Dutch Shell Plc's Nigerian output, which was cut by militant attacks, likely will return within two weeks, a government official said yesterday. Shell is losing about 164,000 barrels a day as a result of political violence in the country.

'Investor Demand'

Oil's records are less due to "fundamental changes" than "the increasing proportion of investor demand driving prices higher," said Eugeb Weinberg, an analyst at Commerzbank AG in Frankfurt. "I think we'll achieve a price of $150 in the coming six months."

The Organization of Petroleum Exporting Countries said in a statement yesterday there's no need to raise output as "the considerable depreciation in the U.S. dollar" rather than limited supply is behind record prices. OPEC President Chakib Khelil said the weaker dollar may drive prices to $200 a barrel.

OPEC will probably meet before its next scheduled conference in September, Shokri Ghanem, chairman of Libya's National Oil Corp., said today.

U.S. distillate stockpiles declined 107,000 barrels to 105.7 million, the Energy Department reported on May 7. Refineries in the U.S. operated at 85 percent last week, down from 89 percent the year before, the data showed.

"Diesel is the main driver for the oil rally right now with the U.S., Europe, Asia and Middle East short of cargoes," said Tetsu Emori, a fund manager at Astmax Ltd. in Tokyo. "The Nigerian shutdown isn't helping as that type of crude oil is good to make gasoline and diesel."