Oil climbs to new record above $147 a barrel - KSWO 7News | Breaking News, Weather and Sports

Oil climbs to new record above $147 a barrel

Oil prices spiked to a new record above $147 a barrel Friday, as rising hostilities between the West and Iran and the potential for attacks on Nigerian oil facilities gave investors reason to rush back into the energy markets.

The resurgence in crude prices not only raises the concern that $4-a-gallon gasoline is here to stay for U.S. drivers - it also means that heating American homes could get significantly more expensive this winter. Heating oil futures surged on the New York Mercantile Exchange to a record of more than $4.15 a gallon, and natural gas also rose sharply.

Iran, which has long been under U.N. scrutiny for its uranium enrichment program, has been testing missiles this week, including a new missile capable of reaching Israel. On Thursday, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies, and Iran responded with another missile launch.

Light, sweet crude for August delivery jumped $4.69 to $146.34 a barrel in early trading on the Nymex, after reaching an all-time high of $147.27.

Crude had fallen by nearly $10 a barrel over two days at the start of the week, but rebounded by more than $5 a barrel Thursday as anxiety heightened about Middle East and Nigerian supplies being disrupted.

Neither the United States nor Israel has ruled out a military strike on Iran. Traders fear the oil producing nation could block the Strait of Hormuz, through which about 40 percent of the world's tanker traffic passes.

"There's always a fear premium in pricing. The tensions in Iran and the threat of supply disruption will help support oil prices," said Jeff Brown, managing director of FACTS Global Energy in Singapore.

The Organization of Petroleum Exporting Countries warned Thursday that it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market.

Also Thursday, Nigeria's main militant group said it would resume attacks in the oil-rich region because of Britain's recent vow to back the government in the conflict there. Unrest over the past two years have already lowered the nation's typical daily oil output by a quarter.

JBC Energy in Vienna, Austria, said the news about Iran and Nigeria - as well as a reported threat of a strike by oil workers in Brazil - were "enough to wake the market from its two-day slumber."

Meanwhile, the dollar weakened against other major currencies Friday. The falling dollar has been a major factor behind the surge in crude oil, which is denominated in dollars; oil's rise has not been as severe for countries with stronger currencies, and meanwhile, traders have been using commodities as a hedge against the tumbling U.S. currency.

In other Nymex trading, gasoline futures rose to a new trading record of $3.631 a gallon before easing back to $3.6194, up 10.85 cents. Heating oil futures rose to their own trading record of $4.1586 before falling to $4.144 a gallon, up 10.66 cents.

Natural gas futures rose 14.1 cents to $12.436 per 1,000 cubic feet.

August Brent crude rose to a new trading record of $147.50 before easing back to trade $4.82 higher at $146.85 a barrel on the ICE Futures exchange in London.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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