Oil hits record ($145.98) above $147 on Nigeria unrest, Israel / Iran tension

Posted Jul 11th 2008 9:03AM by Joseph Lazzaro
Filed under: International Markets, Brazil, Middle East, Commodities, Oil, Israel

Oil rose more than $4 a barrel early Friday morning to a record $145.98 on concerns that Israel may be preparing to attack Iran and on supply concerns in Nigeria and Brazil.
[Update: Oil prices continued to climb, reaching a record of $147.03 a barrel, and this may not be the last update.]

Oil came within a whisker of $146 per barrel after Israeli fighter jets reportedly practiced over Iraq according to Iraqi and Iranian sources. This, however, was enough to increase speculation among traders that Israel is preparing to launch a military strike against Iran's nuclear facilities.

The United States and the European Union want Iran to end uranium enrichment, a technology that would give Iran the materials needed to produce a nuclear bomb. Iran says it wants the nuclear technology solely to produce electricity for civilian use. If one discounts oil sands, Iran has the world's second largest proved oil reserves, after Saudi Arabia.

Oil was also fanned higher by threats of additional Nigerian civil unrest and Brazilian oil union's plan to start a 5-day strike, Bloomberg News reported Friday.

The other major energy commodities, likewise, also jumped in early Friday morning trading. Heating oil surged 8 cents to $4.12 per gallon, unleaded gasoline rose 6 cents to $357 per gallon, and natural gas jumped 16 cents to $12.53 per million BTUs.

The aforementioned potential new supply concerns occur at one of the worst times possible, many economists and oil analysts agree. Economist Glen Langan said the small safety cushion between daily global oil supply and demand means that any further disruption in supplies "would lead to out-sized gains for oil, to new record highs, which is exactly the opposite of what the world needs right now."

Oil Analysis: Obviously, all eyes are on the Middle East situation, with the hope that Iran will agree to end uranium enrichment and comply with United Nations sanctions and directives. Any military conflict with Iran would likely result in some action by Iran to disrupt oil flows and/or block the Strait of Hormuz, through which about 20% of the world's oil flows.

Tags: Brazil, gasoline prices, inthenews, Iran, Israel, Nigeria, oil, oil prices, oil shock, United Nations