In New York, light sweet crude rose $1.54 a barrel, or 5.1 percent, to $31.74.

Light sweet crude settled 9 cents to 20 cents higher, with August at $20.76 a barrel.

"Obviously, we'd love to find deposits with sweet light crude in shallow fields," said Mr. Nelson, who carefully explains the complex challenges his company faces.

April light sweet crude rose $1.28, to $23.27 a barrel, the highest price since Nov. 6, 1991.

Moreover, the excess capacity the Saudis have is largely in heavy oil, not in the sweet crude the market wants.

Ms. Wiater said a shortage of light, sweet crude was driving up prices.

Light sweet crude ended 2002 at $31.20 a barrel on the New York Mercantile Exchange.

The announcement did push up the price of sour crude relative to sweet, according to industry experts.

Market participants said the price of sour crude actually started to close in on the price of sweet crude in trading late Tuesday afternoon.

The January-delivery contract for light sweet crude fell 58 cents, to $19.15 a barrel.