As Joseph Lazzaro wrote earlier today, oil prices were surging once again in today's market, and traders set a new record, pushing prices up as high as $114.08 today.

Fueling today's rally were concerns over global supply, as news spread that Russian oil production has fallen this year. This is the first time in a decade that Russia is seeing a decline in its production.

Russia is not the only country making headlines. We were also given the news that China had a massive jump in its diesel oil imports last month of a remarkable 49%. So, we are being given both the news that Russia is producing less, while China is demanding more; the perfect recipe for a strong day for oil prices. Other oil producers, Mexico and Nigeria, announced that they had temporarily shut down some of their production as well.

The recent run up in oil prices has been a major reaction to the falling dollar, but it has gotten to the point now where the market is so emotional that any hint that supplies could be in question is resulting in higher prices.

Also in the news this week is Iran. While tensions in the Middle East are nothing new, any rhetoric that flows out of the oil rich region will result in spooking oil traders into driving prices higher. Yesterday, Iran put out a pretty stiff warning to Israel. Iranian deputy commander of the Iranian armed forces, Mohammad Reza Ashtiani, stated today that his country was prepared to crush Israel, and that "Israel would be wiped off the global arena" should Israel make any move against it.

Tensions over Iran and its possible nuclear program have had oil traders worried for the past few years. Iran is steadfast in the fact that it is only seeking nuclear technology for peaceful purposes, but not everyone (especially the United States), is so sure, and argue that Iran needs to be stopped from further pursuing any nuclear technology out of the fear that the country is trying to develop nuclear weapons.

So far sanctions have not been able to convince Iran to halt its program, and just last week, Iranian President Mahmoud Ahmadinejad announced that his country was actually expanding the program. Whether or not Iran is looking to enrich uranium in order to power nuclear power plants, or to use in nuclear weapons is up to you to decide.

Iran is the world's fourth largest oil producer, so as long as tensions are running high with the country, oil traders will continue to worry about what would happen should production from the country get disrupted.

So what does all this really mean for you? Well, the most notable impact is what you are feeling every time you pull into your local gas station to fill up your tanks. Gasoline prices have been surging to new highs, and once again set a new high last night, at $3.39 a gallon, according to AAA. At its current price, gasoline prices are now more than 50 cents a gallon higher than they were at this time last year, and showing no signs of relief.

Analysts have predicted, on average, that we will be seeing prices top out around $3.60 by the middle of the high demand summer driving months, but don't be fooled if we blow through that estimate before it is all said and done. A lot of industry analysts are predicting that prices will actually move up as high as $4.00 a gallon before retreating later this year. Let's hope they are wrong.

OK, to finish this up, let's take a look at just how sharp oil prices have risen lately. Here is a current chart to get a better impression: