In early morning trading, the price of West Texas Intermediate oil was $136.59 on the New York Mercantile Exchange, almost $10 below the record of $145.85 set on 3 July.

Israeli Prime Minister Ehud Olmert responded to news of the Iranian tests by saying: “Their [Iran's] aggressive ballistic missile programme is a matter of grave concern.”

Elsewhere, the International Energy Agency, which acts as an energy adviser to 27 of the largest oil-consuming nations, says growth in oil demand worldwide will drop off in 2009.

The Paris-based adviser says world oil demand will grow by 860,000 barrels a day (b/d) in 2009, hitting a total of 87.7 million b/d. The increase will be lower than the 890,000 b/d rise of this year.

It also emerged this week that two more summits of oil producers and consumers will be held before the end of the year to build on the Jeddah meeting convened by Saudi Arabia last month.

Japan is expected to host the second meeting in September with the third to be held in London in early December.