Mumbai: Crude oil prices bounced back from the morning lows around $123 and hit a record high above $135 a barrel following news of an explosion near a refinery in Kuwait.

The explosion occurred at a petrochemicals facility outside Kuwait National Petroleum Company's 270,000 barrel per day refinery, in the industrial area of Mina Abdullah.

It was not clear what caused the blast. But, oil officials said the explosion did not affect oil exports or operations at the OPEC member's second-largest refinery nearby.

The spike was also aided by a fall in US supplies of crude but the price later fell back sharply as traders booked profits.  US benchmark sweet, light crude contract hit $135.09, recording a gain of more than 40 per cent over the year. It was ruling at $65 in May 2007.

Light, sweet crude oil is most commonly used for processing into petrol and is in high demand. It has large amounts of the content used to make petrol, top-grade diesel and kerosene. It also has low levels of sulphur.

Prices, however, fell back as dealers took profits from the surge, settling down $2.36 at $130.81 a barrel

London's Brent crude fell $2.30 to $130.40, having set an intra-day high at $135.14 a barrel.

Kuwait is the world's seventh-largest oil exporter. It pumped 2.58 million barrels daily in May. It plans to boost refining capacity to 1.415 million bpd from 930,000 bpd with a new plant, and upgrade its Mina Abdullah and Mina Ahmadi refineries.