Asia shivered today as a hurricane in the United States pushed oil prices beyond US$70 dollars a barrel, disrupting economic forecasts and threatening to fuel social instability halfway across the world.

From rich families planning yearend holidays to poor commuters dreading the prospect of higher bus fares, Asians were assessing the impact of surging crude costs - caused in part by the region's own insatiable demand for energy.

New York's benchmark light sweet crude for October delivery hit a high of US$70.80 in early Asian trading hours as Hurricane Katrina threatened oil production platforms and trading centres in the southern United States.

But at 6pm (1000 GMT) in Singapore, after the monster storm was downgraded a notch, the contract fell back to US$69.06, still up US$2.93 from its close of US$66.13 in the US market last Friday.

Asia-Pacific stock markets tumbled as the cost of crude reached a level widely seen as a tipping point at which oil costs will begin eroding economic growth, weaken currencies, fuel inflation and force interest rate hikes.

While Asian oil producers like Malaysia and Brunei are reaping a windfall and Singapore's oil rig manufacturing industry is being buoyed by rising orders from exploration companies, the overall sentiment was one of uncertainty.

Malaysian Trade Minister Rafidah Aziz said today in Singapore that price volatility is not good for the world economy.

"We want stable oil prices, not one that shoots up to the ceiling and then falls again," Rafidah said on the sidelines of a business seminar.

US$100 per barrel?

David Cohen, a Singapore-based analyst with research firm Action Economics, said runaway oil prices "represent the biggest cloud on the economic outlook which otherwise remains bright."

Cohen and other economists are still hopeful that continued growth in the United States and China, the most crucial export markets for many Asian economies, will mitigate the impact of higher oil prices.

John Koldowski, managing director of the Strategic Intelligence Centre at the Pacific Asia Travel Association in Bangkok, said the travel industry was taking "a long hard look" at what is going on in the oil sector.

Analysts had dismissed speculation of 100-dollar oil a few months back but "we're really now starting to take it seriously," he said.

"It's a whole new ballgame for us. We're now talking about prolonged levels of relatively high oil prices," Koldowski said.

Leisure travel may be curtailed, he said.

Sean Seah, manager of Asian travel portal zuji.com, said air ticket prices are generally at their peak during the yearend holidays.

"What we observe is that people who wish to spend the festive season with their families are more willing to pay the higher peak season prices," he said.

"However, if long-haul prices do reach a too-high consumer price point, which is yet to be determined, travellers deciding on a year-end holiday destination may decide on short-haul locales which could come with lower-priced tickets," he added.

A spokesman for Singapore Airlines, asked if it will again raise fuel surcharges on passengers, replied: "If we have anything to announce about the fuel surcharge, we will make announcements at the appropriate time."

The impact of higher crude prices was all too real for ordinary people who could never even dream of playing the stock market or travelling overseas.

Street protests

In Indonesia, the rupiah fell below the psychological 10,500 level against the US dollar and President Susilo Bambang Yudhoyono was under growing pressure to lift subsidies on domestic pump prices, a politically explosive issue.

Indonesia is a member of the Organisation of Petroleum Exporting Countries but is a net oil importer because it is unable to meet domestic demand.

Subsidised local oil prices are wreaking havoc on Indonesia's public finances and putting pressure on the rupiah but ending subsidies could trigger street protests.

In Manila, domestic oil prices have also been a highly charged issue for decades.

Alex Aguilar, spokesman for the Trade Union Congress of the Philippines, warned of a possible reprise of the first oil crisis in the 1970s when many companies were forced to lay off thousands of workers and close factories.

University student Julius Carsula said he plans to ask his parents to raise his daily allowance of 150 pesos (US$2.68) because it is no longer enough to cover his daily commute and food expenses.

"We used to go out and eat out with friends and go to the movies. We rarely do that now because even movie tickets are now more expensive," he said.