Oil prices briefly spiked to a new record above US$147 a barrel on Friday as rising hostilities between the West and Iran and unrest in Nigeria sent investors rushing back to energy markets.
A decline in the US dollar and concerns about an oil worker strike in Brazil contributed to the higher price.
Light, sweet crude for August delivery soared to an all-time high of US$147.27 a barrel before settling at US$145.08, up US$3.43.
That was slightly below last Thursday’s settlement record of US$145.29 a barrel.
On London’s ICE futures exchange, Brent crude settled at US$144.49, up US$2.46.
Crude had fallen by nearly US$10 a barrel over two days at the start of the week, but rebounded by more than US$5 a barrel on Thursday as anxiety heightened about Middle East and Nigerian supplies being disrupted.
The resurgence in crude prices stokes concern that US$4-a-gallon (US$1.05 a liter) gasoline is here to stay for US drivers and means home heating could get much more expensive this winter.
In other NYMEX trading, heating oil futures rose to a trading record of US$4.1586 before settling at US$4.0766 a gallon, up US$0.0392.
Gasoline futures also rose to a new trading record of US$3.631 a gallon before finishing at US$3.5632, up US$0.0523.
“If you think your gasoline bills are expensive now, wait till you get your home heating bill this winter,” said Stephen Schork, an analyst and trader in Villanova, Pennsylvania.
While US consumer demand for gasoline is waning as people try to save money, other factors are keeping energy costs high: The weak dollar, refineries cutting back on production and resilient demand for diesel fuel. Diesel is a distillate fuel produced and distributed similarly to heating oil, so diesel demand often affects the price of heating oil.
The other big reason gasoline and heating bills are likely to stay high is unrest in the Middle East and Africa.
“The bulls are still able to spin a bullish case on this — not based so much on the fundamentals, but on a lot of ‘What if?’ scenarios,” Schork said.
Iran, which has long been under UN scrutiny for its uranium enrichment program, has been testing missiles this week, including a new missile capable of reaching Israel. On Thursday, US Secretary of State Condoleezza Rice warned the oil-producing nation that the US would defend its allies, and Iran responded with another missile launch. Neither the US nor Israel has ruled out a military strike on Iran.
On Friday, there were rumors of Israeli military exercises taking place in Iraqi airspace, which were reportedly denied by Israeli officials.
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