Since the middle of July we have been able to breathe a little sigh of relief as oil prices have been heading lower from the recent record highs. However, this morning oil prices are getting a slight boost as traders try to digest additional supply concerns.

Lately, it has been hard to discuss the state of oil prices without mentioning Iran and its controversial President, Mahmoud Ahmadinejad, and that holds true again this morning. Over the weekend, the leader of the Islamic Republic caused even more tension over his country's nuclear program.

Iran has been claiming for the past couple of years that it has only peaceful intentions regarding its nuclear program, but of course the rest of the world, in particular Israel and the United States have voiced openly their distrust, and have claimed Iran has a more sinister intention ... nuclear weapons.

I know that last thing you probably wanted to hear this morning was that oil prices moved even higher, but that is exactly what is taking place, as oil rose as high as $125.98 and is currently trading at $125.60.

Leading the charge today is the weak dollar as investors continue to seek refuge from the falling U.S. currency in commodities -- most notably, oil. The dollar has fallen today against the euro, the British pound, and the Japanese yen. The euro was sitting at $1.5404 last night, but has moved higher today, up to a current price of $1.5466.

The market is also concerned about the upcoming peak driving season for Americans. With the season getting under way, oil prices will definitely continue to rise, and if gasoline stockpiles continue to fall, you can be sure that gasoline prices are also going to keep moving higher over the next couple of months. Will we see national averages of $4 or greater? I don't think so, but at the current rate prices are moving, nothing is out of the question right now.

Oil prices have once again hit new highs today, trading up all the way to $118.05, before cooling off slightly, and are currently sitting at $117.85.

The main concern fueling today's move is over supplies from some of the world's major oil producing countries. Nigeria is on the list, as a joint venture of Royal Dutch Shell PLC (NYSE: RDS) stated that it would be reducing its output in April and May by around 169,000 barrels a day. This comes in response to a militant attack on one its pipelines last week.

This is really nothing new to Nigeria, which over the past two years has been the victim of multiple attacks on its oil infrastructure. The country is a major supplier to the the United States, and over the past 2 years the country has seen its oil output fall by a pretty hefty 25%. All the result of militant attacks.

While many older oil fields are producing less than they used to, new discoveries of crude may make up for that. The Wall Street Journal reports, "Projects under way in Brazil, Saudi Arabia, West Africa, the Caspian Sea and the Gulf of Mexico will more than make up for natural declines from fields now in production."

If the information is accurate and oil demand falls due to an economic slowdown, prices for crude could drop over the next several years.

What is not clear is whether demand for oil in markets like China and India will continue to spike up. If the Chinese government is willing to underwrite the cost of gas and diesel for its industrial and consumer sectors, the use of oil in that country could continue to rise at an alarming rate.

Distorted demand, caused by the Chinese government, could be the wild card in oil pricing.

Douglas A. McIntyre is an editor at 247wallst.com.