NEW YORK (Daily Telegraph) -- OIL prices jumped back above $U.S.75 a barrel in Asian trade today as hopes for a quick ceasefire in Lebanon faded and concerns grew at the approach of a tropical storm in the U.S., dealers said.

At 10.35 A.M. (1235 AEST) New York's main contract, light sweet crude for September delivery, was U.S.39c higher at $U.S.75.30 a barrel from $U.S.74.91 in late U.S. trades yesterday.

The contract hit $U.S.75.45 earlier yesterday, its highest level since July 18.

Brent North Sea crude for delivery in September was up US33c at $US76.22.

Yesterday it briefly touched $U.S.76.58, which was also last seen on July 18.

"It seems right now the Middle East conflict will take longer than people expected, especially the prospects for a ceasefire," said Dariusz Kowalczyk, senior investment strategist with CFC Seymour in Hong Kong.

Israeli troops fought fierce battles with Hezbollah guerrillas in Lebanon early today as United Nations Security Council members struggled to overcome differences on how to end the violence.

Israel's decision to widen its three-week-old offensive came amid apparent disagreement among major powers on how to end the conflict.

Ambassadors from the five permanent security council members appeared split over the timing of a ceasefire after holding what were described as "frank discussions" along with UN Secretary General Kofi Annan in New York.

The five - Britain, China, France, Russia and the United States - were unable to agree on a resolution amid differences over the sequence of any ceasefire and the deployment of an international force.

White House spokesman Tony Snow said an immediate cease-fire was "something that at this point doesn't seem to be in the cards". John Kilduff, an analyst at Fimat U.S.A, said: "the hopes of a ceasefire retreated" while Syrian armed forces were told they should be ready to face Israeli and American forces.

Concerns that fighting in the area might spark a wider conflict in the Middle East caused oil prices to soar to all-time highs above $U.S.78 last month.

The emergence of tropical storm Chris has added to nervousness, given fears it could gain strength and hit oil platforms and refineries along the U.S. Gulf Coast which are only just recovering from last year's hurricane season.

“It's a potential threat to oil and gas installations ... we don't know where the storm will go and its intensity, so it's a threat,” Kowalczyk said.

U.S. weather experts forecast that between eight and 10 hurricanes - as many as six of them major - would form in the Atlantic basin during the six-month storm season that started on June 1.