Oil sets new record near $146 a barrel

Oil prices spiked Friday as continued tensions in the Middle East and concerns of renewed violence in Nigeria pushed the price for a barrel of oil to a record near $146.

By midday in Europe, light, sweet crude for August delivery rose $3.53 at $145.18 a barrel electronic trading on the New York Mercantile Exchange. Prices at one point jumped well over $4 to a record $145.98.

Oil prices had fallen $10 over two days to start the week and as oil rebounded Friday, Dow Jones industrial average futures fell 62, or 0.61 percent, to 11,155.

In London, August Brent crude rose $3.34 to $145.37 a barrel on the ICE Futures exchange.

“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.

JBC Energy in Vienna, Austria, said the news about Iran, 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.”

 A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch, drawing buyers back to jittery energy markets.

Both the US and Israel have not ruled out a military strike on Iran as a last option if it does not give up uranium enrichment and heed other UN Security Council demands meant to dispel the fear Tehran wants to make nuclear arms.

The Organization of Petroleum Exporting Countries has warned that it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market. The fear is that Iran, OPEC’s second-largest producer, could block the Strait of Hormuz, a passageway that handles about 40 percent of the world’s tanker traffic.

Meanwhile, attacks on Nigerian oil facilities could again disrupt supplies in the oil-rich region.

Courtesy :- Economic Times

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