The fresh peak came in the week the AA motoring organisation reported the highest monthly rise in average diesel prices this century - up by 6.76p to 124.17p a litre. Petrol also leapt 4.49p to 112.55p a litre in the month to mid-May.

Crude oil for July delivery peaked at 135.04 dollars in overnight Asian trading as demand showed no signs of abating.

The spike came after US figures showed an unexpected drop in stockpiles as downbeat growth forecasts from the US Federal Reserve weakened the dollar.

Oil was trading at around 66 US dollars a barrel a year ago - less than half today's level - but traders have been buying crude as a hedge against the faltering dollar. This has caused a surge in the price of oil - a practice attacked by AA president Edmund King earlier this week.

The steep rise has also put the Bank of England's efforts to control inflation under pressure.

Governor Mervyn King warned last week that inflation could spike as high as 3.7 per cent later this week - nearly double its 2 per cent target - on the soaring oil prices, at a time when food and other household bills are on the rise.

Lorry drivers are to descend on London next week in what organisers hope will be the largest-ever fuel duty protest in the capital.

Led by hauliers from Kent, the demo next Tuesday is likely to involve hundreds of trucks which will park in central London.

A delegation will hand in a letter to 10 Downing Street demanding the immediate introduction of an essential user rebate which would allow heavy goods vehicle to claim some of the fuel duty back as companies struggle to accommodate soaring fuel prices.

Mike Presneill, a leading member of Transaction 2007 who is helping to organise the protest, said: "Fuel is rocketing. The Government has the power to act but appears not to be listening. Hundreds of UK transport firms are being driven to the wall. Thousands of UK jobs are being lost."

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