Oil prices hit new record highs Tuesday on heightened concerns about a potential Turkish incursion into northern Iraq to pursue Kurdish rebels.

The price of U.S. crude for November delivery settled up $1.48 at a record $87.61 per barrel. Earlier, the price climbed as high as $88.20.

Dealers say there is concern that an escalation of fighting along the Turkish-Iraqi border could affect oil production and pipelines in northern Iraq. They say another factor driving up the prices is low supplies of oil in the United States and other consumer nations heading into winter.

In a statement Tuesday, the chief of powerful oil cartel OPEC, Abdullah Al-Badri, said the group does not favor higher prices, and insists the market is well-supplied.

Some information for this report was provided by AFP, AP and Reuters.